The state of the US semis market has not changed much in the last month; the market remains slow and quiet, with hardly any buying or selling activity being observed as buyers continue to wait for some improvement in the steel market before making any major purchases.
The majority of the domestic steel mills are not operating or are operating on reduced schedules through at least the end of the year and in many cases into January as well. Due to the reduced longs production, billet demand is still very low while there are plenty of billets available in the market. In recent weeks, US domestic billet prices have hovered between $375 and $400 /short ton ($413 /mt or $18.75 cwt. and $441 /mt or $20 cwt.), though some offers as high as $500 /short ton ($551 /mt or $25 cwt.) were heard as well.
Meanwhile, despite the continued sluggishness of the global steel market, international billet prices are trending upward, mainly due to the upward trend in international scrap prices. SteelOrbis has learned that offers of ex-CIS billets from CIS ports are standing at the levels of $390 to $400 /mt CFR for January/February shipments. Prices have increased by approximately $60 /mt when compared to our last report on December 3. In Turkey, last week billets were offered at $420 to $430/mt FOB Turkey, which shows an increase of $20 to $30 /mt from the previous week.
However, the global economic crisis has impacted international billet demand heavily, as is reflected in US billet export figures. The total amount of US carbon billet tonnage exported in November dropped to 2,142 mt, which is a significant 39,981 mt less than the figure of 42,123 mt in October. The main export destinations of US billets during the period were: Canada, at 942 mt; Venezuela, at 657 mt; and Mexico, at 198 mt. Other countries that also received US billet exports include Japan, India, and China.
Similar to the export market, semis imports are also down. The total amount of billets, slabs, and blooms imported in November 2008 was 130,571 mt, which reflects a decrease of 182,966 mt when compared to the figure of 313,537 mt in the corresponding period a year ago.
Looking specifically at billet imports into the US, the November 2008 total was 19,394 mt, compared to 39,619 mt in October. Steel Import Monitoring and Analysis (SIMA) system data show that during November the US mainly imported billets from: Russia, at 9,995 mt; Mexico, at 5,102 mt; Canada, at 2,357 mt; and Belgium, at 1,120 mt. Japan and Switzerland also exported some tonnage of billets to the US during the month.
The US slab market is also quiet, with international prices floating between $350 and $400 /mt FOB Russia, Ukraine and India. Market sources expect the slab market will stay, more or less, the same for January and February due to the weak demand; however, the tightened credit flow is now affecting large slab purchases negatively.
Another factor for the US and international slab markets is iron ore. The majority opinion is that the iron ore contract price will decrease in 2009. This is expected to be reflected in a lower price level for slabs in 2009 as well.
November import statistics show that the amount of slabs imported into the US decreased significantly to 74,915 mt in November, from 402,870 mt in October. The largest quantities of import slabs arriving in the US during November 2008 came from Russia, at 40,047 mt and India, at 30,317 mt. Other smaller slab sources during this period included Canada, Germany and Italy.