Both US billet and slab prices have gone up after the significant US scrap price increase of approximately $170 /long ton in the beginning of April.
Buyers are able to obtain billet tonnages as long as they are willing to pay high prices for them, while demand has remained only lukewarm. Although billet availability is plentiful in the market, the high prices make the re-rollers hesitate to buy in light of the weak long product demand, and choose to keep their inventories at a low level.
US billet prices have increased approximately $150 /nt ($165 /mt or $7.50 cwt.) in April, a movement that is wholly attributable to the US scrap price increase seen earlier this month. Meanwhile, more scrap price increases are expected for May as US suppliers are trying to raise their numbers to match the higher international scrap prices. Today, the average billet price in the US is around $750 /nt ($827 /mt or $37.50 cwt.). Market sources believe that the billet pricing trend is still headed up for May due to the further upward movement expected for scrap prices.
The most recent data from the US Steel Mill Import Monitor show that during the first quarter of 2008, the US mainly imported billets from: Canada, at 17,246 mt; Brazil, at 12,335 mt; and Mexico, at 10,630 mt.
In 2007, the US imported 513,045 mt of carbon billets, which is 307,368 mt less than the figure of 820,413 mt in 2006. Imports have slowed down mostly due the high international price levels, with most import offers priced significantly above domestic offers.
CIS origin 3SP-5SP billets are currently being offered by CIS producers for export at $915-925/mt FOB Black Sea for late June shipments. In Turkey, most billet producers have been offering to the export markets at price levels of $930/mt to $950/mt FOB, while some producers are offering at levels of above $970/mt FOB.
While imports are slowing down, the weak USD and high international demand is facilitating exports from the US. On the export side, tonnages of US billets exported in February were almost doubled when compared to January. In February, the total amount of US carbon billet exports was 6,857 mt, which is 3,284 mt more than the figure of 3,573 mt in January 2007.
US carbon billets exported in January and February were mainly shipped to: Taiwan, at 2,861 mt and Vietnam, at 2,263, mt. Some billet exports are also going to Venezuela. However, traders are reporting with the rapidly increasing scrap prices, mills are less interested in exporting. Before the last flurry of increases, US billet prices were the lowest in the world; however, new price levels with the addition of high freight rates (mostly container) have made the US numbers on par with other international sources.
Turning to slabs, global demand for flat rolled steel is strong, except in the US, where supplies are adequate, despite the rising prices. US is traditionally a slab importer; however, the slow flat rolled demand in addition to today’s weak dollar are working against slab import activities.
Despite the lack of strong demand in the US, international suppliers have raised their slab prices in proportion to the domestic hot rolled coil price increases. As a result, current slab market prices are over $800 /mt FOB loading port (South America and Mexico). Accordingly, slab prices will rise again if the hot rolled coil prices continue to rise.
The largest quantities of import slabs arriving in the US during the first quarter of 2008 came from Mexico, at 274,673 mt; Canada, at 269,691 mt; Ukraine, at 158,650 mt; Brazil, at 111,282 mt; and Russia, at 100,196 mt. Other smaller slab sources during this period include Poland, India and Japan.
US imported 4,853,416 mt of carbon slab in 2007. Data shows that the US imported 2,272,608 mt more in 2006 with the figure of 7,126,024 mt when compared to 2007. This is a big drop in imports in 2007. The slow US economy and continuing devaluation of the US dollar in 2007 are expected to result in an even lower import figure for 2008.