US semis demand and pricing is getting stronger due to the improving long product markets and increasing raw material prices.
The US billet market is certainly getting busier. For quite some time now, the US market been a net exporter of billets. Traders report that the booming Asian market is getting a lot of inquiries from the US, and some decent tonnage orders have been fixed with the mills. Incidentally, the usual means of transportation involved in these orders to Asia is by container. Export numbers are between $650 and $660 /mt FOB loaded containers in US ports. Prices are expected to go up with the rest of the long product markets and upward-trending scrap prices.
Scrap prices in the US have increased $20 /mt so far in March, plus long product producers have announced price increases for April, which have allowed billet prices to go up $20 /mt in March. Current US domestic billet prices range from $620 to $640 /mt delivered to rerollers. Market sources expect that billet prices will go up again in April since the scrap market is strong. Also, the increasing amount of export activity will help to raise prices in the US.
The global billet market is strong, with international prices going up across the board. CIS origin 3SP-5SP billets are currently being offered for export at $790 to $800/mt FOB Black Sea for May shipments, but prices are going up daily. In Turkey, rapidly rising prices are making billet producers unwilling to quote. Some of them are shooting ahead of the curve, asking for $900 /mt FOB for late May/early June shipment.
US carbon billets exported in December 2007 and January 2008 were mainly shipped to: Taiwan, at 1,533 mt; Venezuela, at 947 mt; and Canada, at 857 mt. The total amount of US billet exports in January was 3,573 mt, which is 373 mt less than the figure of 3,946 mt in December 2007. These figures are expected to increase significantly in February and March since the international markets have rallied faster than US billet prices in the last three months. The weak US dollar is also helping exports.
On the whole, US exports of carbon billets were strong in 2007, totaling 140,844 mt, a whopping increase of 218.8 percent when compared to the figure of 44,173 mt in 2006.
As for billet imports, the most recent data from the US Steel Mill Import Monitor show that during January and February 2008 the US mainly imported billets from: Brazil, at 12,182 mt; Canada, at 12,247 mt; and Mexico, at 5,752 mt, possibly for special size and grades.
On the slab side, suppliers are asking for $680 to $700 /mt FOB in the second quarter. US West Coast prices are approximately $740 to $750 /mt CFR for commercial grades. Spot slab prices are continuously rising in order to catch up with the price increases of hot rolled coil and raw materials such as iron ore and manganese.
In the second quarter, market insiders believe that the slab market will be very strong in terms of prices, as most flat rolled producers have announced finished product price increases for April and May.
The latest news as regards slab imports is that Brazil, due to its strong domestic slab demand, has been reducing the amount of slabs it exports. The largest quantities of import slabs arriving in the US during January and February 2008 came from Canada, at 173,020 mt; Mexico, at 146,457 mt; Brazil, at 111,282 mt; and Ukraine, at 106,302 mt. Other smaller slab sources during this period include Russia, India, Japan and Australia.