US semis prices have moved up approximately $80 /mt to $100 /mt since December 2007, though the supply-and-demand situation has not really changed all that much.
The billet price increase is wholly attributable to the increase in scrap prices of $80 /long ton in the beginning of January, while billet demand is still lukewarm, and supply is plentiful. Current billet prices range from $600 to $620 /mt delivered. Market sources mention that billet prices may come up again in February, with suppliers trying to catch their prices up with the already boosted scrap prices. In February, however, scrap prices are not expected to register a big increase; on the contrary, scrap prices may adjust downwards slightly.
In January, worldwide billet prices stayed strong and have increased by more than $100 /mt since the previous month. CIS origin 3SP-5SP billets are currently being offered for export at around $660 to $670 /mt FOB Black Sea for late March/early April shipments. Billet export offers ex-Turkey are in a price range of $700 to $710 /mt FOB Turkish port for late March/early April shipments.
There are almost no billet imports coming to the US, due to the higher international prices compared to US pricing.
The most recent data from the US Steel Import Monitor show that during the fourth quarter of 2007, the main countries that exported billets to the US were: Brazil, at 37,301 mt; Canada, at 11,918 mt; and Mexico, at 5,053 mt.
On the export side, the top recipients of high carbon billet from the US in November 2007 were: Canada, at 12,846 mt; Taiwan, at 1,543 mt; and Venezuela, at 694 mt. The total amount of US billet exports in November 2007 was 18,298 mt, which is 4,761 mt more than the figure of 13,537 mt in October 2007.
Traders are working on export deals to Turkey and the Middle East, although export deals are hard to strike because the US mills are very reluctant to quote competitive numbers due to uncertainty about the scrap market. They are expected to resume offers, however, to a new level which will be at least $100 /mt higher than the previous booking prices of $480 to $490 /mt FOB Gulf ports. Even with a hefty increase, US billets could still be considered to be the cheapest in the world, though the lack of availability of bulk freight ships makes deals challenging to conclude. Containers are a viable shipping option for smaller quantities, as observed in trade stats, particularly to Asia.
Spot slab prices are also increasing, thanks to the $80 /nt price increase for domestic flat rolled products in the first quarter, and there is an expectation of a big jump in iron ore prices this year. Slab suppliers are looking for an $80 to $100 /mt price increase in the second quarter, which is around $625 to $635 /mt CFR for the West Coast. On a positive note for slab buyers and sellers, ocean freight rates have gone down by $5 to $15 /mt, leaving some margins for both.
Overall, the worldwide slab market is still tight, and demand is more than supply. Mills and service centers are trying to keep inventories at a low level so as to avoid any risks due to the uncertain market condition and the US economy, and to reduce the cost of handling the inventories.
The largest quantities of import slabs arriving in the US during the fourth quarter of 2007 came from Brazil, at 267,298 mt; Canada, at 217,468 mt; Ukraine, at 179,462 mt; Mexico, at 118,919 mt; Italy, at 105,324 mt; and Russia, at 80,688 mt.