With sufficient slab availability and declining US and international flat rolled prices, international slab suppliers are decreasing the prices for slab as well.
Slab prices have been coming down at a fast pace. Currently, international slab suppliers are offering slab at $520 to 530/mt FOB delivered for July/August shipment, which is a decrease of approximately $100/mt from a month ago.
As many blast furnaces resumed operation, slab capacity has been increasing. Consequently, there is plenty of slab availability in the market. However, slab demand has seen no improvement. "The slab supply and demand balance is off," one US re-roller said. Re-rollers are still making regular slab purchases but not in large amounts. Additionally, they are maintaining their inventories at low levels to avoid financial downfall from a sudden market drap.
In addition to the increasing slab supply, the sluggish US and international flat rolled market has also led to the weakness in slab prices. In the US, flat buyers are hesitant to buy due to the unpleasant construction market and adequate flats availability. As a result, US flat rolled products have come down approximately $44/mt from last month, which also brings down slab prices.
On the other hand, iron ore suppliers are continuing to push for price increases. With the increasing slab input cost and decreasing flat rolled products prices, the profit margin for re-rollers is getting narrow. Although there is a certain upward push from raw materials, slab prices are expected to follow the flat rolled pricing trend and come down further in the near future.
The latest data from the US Department of Commerce's Steel Import Monitoring and Analysis (SIMA) system shows that the total amount of slab imports into the US in the month of May 2010 was 407,745 mt, representing an increase of 107,800 mt when compared to the figure of 299,945 mt in April. The main countries that exported slab to the US in May include: Russia, at 127,478 mt; Canada, at 126,560 mt; Mexico, at 43,812 mt; Brazil, at 39,546 mt; India, at 38,842 mt; and Japan, at 31,219 mt. Italy and United Kingdom also imported a smaller amount of slab from the US during the period.