US semis suppliers wait for finished product market improvement

Not surprisingly, the US semis market continues to be slow and quiet due to weak demand from the sluggish finished product markets.

Many re-rollers have sufficient billet inventories as they have reduced their output. Therefore, there is no need for new purchases until end-product sales pick up again. To many steel professionals' disappointment, January didn’t bring the much-anticipated up-tick in the market. In fact, so few transactions are occuring that  there is no established market price for any semi-finished products.  

US billet prices have been ranging between $400 and $450 /nt ($441 /mt to $496 /mt or $20.00 cwt. to $22.50 cwt.) on a delivered basis in the month of January. As many market sources expect that the steel industry will not pick up until at least the end of the second quarter, it is expected that in February the billet market situation will stay more or less the same.

Internationally, billet prices have moved up slightly since the beginning of the year. Ex-Russia billet export offers are currently at the price levels of $400 to $410/mt FOB Black Sea, while export offers from the same region are currently at the price level of $425 to $430/mt FOB Far Eastern Russian ports. Turkish billets are offered at $430 to $450/mt ex-works.

The total amount of billet imports into the US in December 2008 was 13,983 mt, reflecting a decrease of 5,411 mt from November. Data from the US Department of Commerce's Steel Import Monitor show that in December, the US mainly imported billets from: Brazil, at 9,815 mt; Canada, at 2,681 mt; and Japan, at 1,211 mt. Mexico, United Kingdom and Switzerland also exported some tonnage of billets to the US during the month.

Like the billet market, US slab buying is also slow and quiet because slab converters  already have high inventories. Slab offers from Brazil, one of the US' main slab import sources, range from about $340 - $350 /mt FOB Brazil and offers from Asia are at around $330 /mt CFR. Offerings from CIS, Russia and Ukraine are a little bit lower. Suppliers are reportedly open to a lot of price negotiation in efforts to conclude some sales; however, there are still hardly any transactions being observed.

Most commercial people are placing their hope in the US economic stimulus package. World steel consumption is very low across many different industries, and once the infrastructure projects included in the stimulus package are implemented, the market expects to see at least a slight impact on the steel market by the second quarter. For the first quarter, however, steel consumption is expected to remain painfully slow.

After the significant decrease of slab imports in November 2008 from the prior month, the total amount of slabs imported to the US increased to 152,399 mt in December from 74,915 mt in November. The largest quantities of import slabs arriving in the US during December 2008 came from: Brazil, at 55,348 mt; Russia, at 53,969 mt; and Ukraine, at 41,943 mt. Other smaller slab sources during this period included Canada and Germany.