Although the total cancelation of the LME billet contracts in the US will take over a year to complete, sources tell SteelOrbis that the recently-announced delisting might have more than a negligible effect on the US billet market. Specifically, many are wondering what will happen to all the billet currently sitting in US warehouses--while the LME eluded to the possibility of sending the billet to "available warehouses" (presumably in Europe and the Eastern Mediterranean regions, where the remaining contracts will be located), the cost of transporting the material might be prohibitively high. If the LME decides to unload US reserves instead, perhaps at bargain-basement prices, it could prove to be unwanted competition for US mills.
Already, US mills are reportedly trying to keep billet prices from falling below current levels of $515-$525/mt FOB mill--a decrease of approximately $25/mt in the last month. As it is, prices are running virtually level to Russian offerings, while billet prices from Asia are riding the uptrend wave along with other steel products--current Asian offerings have been heard around $570/mt CFR. However, planned shutdowns during this quarter in the US are helping keep availability relatively tight, and expectations of a scrap price surge in January will also help US mills hold on to current billet prices.