Russian flat steel producers, while having almost no allocation to sell abroad for hot rolled coil (HRC) due to the better local market situation, have been rather active in their attempts to trade slabs instead. Several destinations are on the table, but, while the EU is not active and Turkey is not good at all in terms of the workable price, the main attention is being paid to Asia-based buyers.
In Asia, new deals for around 40,000 mt of ex-Russia slabs each have been signed at $475-485/mt CFR, while the previous bookings to China were reported at $470/mt CFR in late June. Higher prices for slabs accepted in Asia have been reflecting a firm price trend in the Chinese flat steel market and some hopes for improvement amid expected Chinese government monetary policy support. However, taking Asia in general, demand has still been lagging behind. The latest import HRC prices in Vietnam have been at $580/mt CFR on average. Taking into account the re-rolling costs and some additional expenses, Russian suppliers have been targeting $500/mt CFR in Southeast Asia, but no new deals have been signed. Ex-Russia slabs have been the most popular in Asia over past months due to attractive prices and the high price level of ex-ASEAN slabs. For instance, ex-ASEAN slab offers have been at around $540/mt CFR recently and $530/mt CFR is possible to get from Chinese traders in Southeast Asia. But since Asian customers have cheaper ex-Russia and ex-Iran options, ex-ASEAN prices remain only indications, not reflecting the real market conditions. The reference price for import slab in Southeast Asia has moved to $480-530/mt CFR, up by $10/mt on the lower end over the past two weeks.
In the meantime, for now Turkey is the least interesting destination for a majority of Russian slab exporters. The 11th package of the EU sanctions, announced earlier, means there will be stricter control of the origin of semis for HRC that is supplied to Europe. For that reason, Turkish HRC producers officially claim they are no longer buying Russian slab. The most recent slab offers from the sanctioned Russian mills have been reported at $450-455/mt CFR, while the non-sanctioned supplier has been voicing $480/mt CFR, SteelOrbis has learned. Taking into account the sanctions situation, Turkish mills are not ready to accept these prices, which are extremely low according to $630-660/mt ex-works local prices for HRC.
At the same time, the price difference between ex-Russia slab prices and the offers for alternative origins is huge. Ex-China slab is on the table at $540/mt CFR while Indonesia and Brazil are at $560/mt CFR. Both levels are definitely not workable according to ex-Russia prices, but might be accepted by those Turkish mills who are in no position to work with Russia. However, they may choose to compensate for imports with their own slab production.
In Europe, according to sources, there is no interest in ex-Russia slabs due to the unstable situation in the domestic HRC market and the upcoming vacation period. However, according to some sources, there are certain talks with buyers from Latin America at $500-510/mt CFR, but there has been no info about the concluded transactions.