US semis prices have stayed at roughly the same level since the beginning of April. Prices haven't seen a major shift, though billet prices have softened slightly along with the scrap market, and slab prices are slightly up, reflecting the improving flat rolled market.
The recent softening in scrap prices has caused domestic billet prices to descend to a range of $565 /mt to $585 /mt ($513 /nt to $531 /nt or $25.62 cwt. to $26.53 cwt.) delivered to rolling mills, which represents a decrease of approximately $20 /mt ($18 /nt or $0.91 cwt). While the US billet supply is decent, demand is only lukewarm.
Wire rod mills are struggling to pass on the price increases they announced last month, and rebar and merchant bar prices have softened along with the scrap prices. Both are indications that the long products market is not at its strongest and is putting downward pressure on billet prices.
Still, current billet prices are higher than slab prices, and certain steelmakers that can make both billets and slabs are focusing production towards billets and away from slabs. For example, Arcelor Mittal Mexico has recently increased billet production while reducing slab production.
On the import side, Brazil, the leading exporter of billets to the US, now has more export capacity and is generating interest for June and July shipments.
The most recent data from the US Steel Import Monitor show that during April, 2007 up to April 24, the main countries that exported billets to the US were: Brazil with 11,395 mt, Germany with 3,046 mt, and Canada with 1,221 mt. Some other countries that exported billets to the US during this period were China, Czech Republic, and Italy.
As for the slab market, the pricing trend is slightly up along with the trend for flat rolled products. Imports and shipments of flat rolled products in the US are down, but demand is still not quite where it needs to be for domestic mills to be able to push their price increases in a major way.
Most of the US steel mills are optimistic about the flat rolled market; however, there are still plenty of skeptics. Although service center inventories decreased in March, they are still above the normal level. It is certain that the US flat rolled market is still quite a ways away from full recovery.
As a result, the US slab buying activity is pretty quiet now, with current slab offers from Chinese and Russian mills ranging from $530 /mt to $540 /mt FOB ($481 /nt to $490 /nt or $24.04 cwt. to $24.49 cwt.) at loading ports. India also offers at around the above range. Add freight and conversion to HRC, and this price range is dangerously close to US hot rolled coil prices, so it is hard for slab re-rollers to make a profit in this situation.
Some insiders predict that slab prices may have reached their peak, as hot rolled coil prices are close to peaking as well. In addition, import and export activity usually declines in the summer, due to the long summer vacation for the steel mills in Europe. Unless the European market is able to obtain a much higher coil price, the slab price is not expected to go up much further.
2007 first quarter slab imports are significantly reduced compared to the same months of 2006. The largest quantities of import slabs arriving in the US during April, 2007 up to April 24 came from Mexico with 81,789 mt, Ukraine with 54,000 mt, Russia with 44,350 mt, Japan with 43,027 mt, Australia with 37,112 mt, and Brazil with 29,889 mt. Slab imports to the US during the same period also came from Venezuela and UK.