The US semis market has stayed more or less the stable since last month. However, with the significant $35 /long ton scrap price increase in December and the expected $30 /net ton plus January price increase for flat rolled and long products, US billet and slab prices are expected to go up in January 2008.
The current billet price ranges from $480 to $500 /mt delivered to domestic re-rollers. Although the billet market has picked up a little bit due to inventory replenishment, demand is still poor and billet availability is adequate. Therefore, if billet prices rise in January, the increase will be wholly attributable to higher raw material costs, not demand.
On the other hand, the worldwide billet market is strong, and prices are on the rise. CIS origin 3SP-5SP billets are currently being offered for export at $550 to $560/mt FOB Black Sea. Billet export offers ex-Turkey are in the price range of approximately $560 to $570/mt FOB Turkish port for February shipments. Based on our last report on November 21, CIS origin 3SP-5SP billets were at $495 to $500/mt FOB Black Sea for late December shipments, and the Turkish billet export level was $530 to $540/mt FOB.
The most recent data from the US Steel Import Monitor show that during November 2007, the only countries that exported billets to the US were: Brazil, at 11,857 mt and Canada, at 2,376 mt.
On the export side, the top recipients of high carbon billet from the US in October 2007 were: Canada, at 10,112 mt; Venezuela, at 582 mt; and Ecuador, at 300 mt. The total amount of US billet exports in October 2007 was 13,537 mt, which is 11,801 mt less than the figure of 25,338 mt in September 2007.
As for the slab market, many suppliers are asking for the price range of $540 to $550 /mt CFR for commercial quality slabs to match the flat rolled price increase in January. Market sources expect slab demand will be not bad in January, but the market situation for February and March is still uncertain.
As in the billet market, slab producers are trying to increase prices solely because of raw material increases, as demand has not improved much. Also, the margin between slab and flat rolled prices has not yet improved. Hot rolled coil prices continue to stay close to the slab prices, making it difficult for slab producers to make much of a margin.
The market situation for slabs may turn around though. Raw material increases along with strong freight rates continue to push slab prices up. Market sources also expect that slab demand will be higher than supply in 2008, since due to consolidation taking place in the industry, buyers may only be able to purchase slabs from a few big suppliers.
The largest quantities of import slabs arriving in the US during November 2007 came from Canada, at 75,464 mt; Ukraine, at 70,942 mt; Mexico, at 40,819 mt; Italy, at 40,265 mt; and Russia, at 40,212 mt.