Weak demand from the finished product markets as well as the global financial crisis both continue to depress the US semis market.
The general sentiment in the slab market has not changed much from a month ago. The market is slow and quiet. Slab demand is weak, and buyers have adequate inventory and thus have no need to place additional slab orders. Slab buyers also want to avoid carrying inventory costs into 2009, which is posing a challenge. December is a short month because of the holidays, and with the high inventory levels along with the credit crisis, market sources expect that slab demand will stay at a low level in both December and January, and that purchasing activity will not resume until February.
Import slab prices are currently at approximately $400/mt FOB Russia and India. Suppliers are trying to maintain the current pricing; however, prices may sink even lower once the buyers start to seriously negotiate their next orders.
October import statistics show, however, that the amount of slabs imported into the US increased to 402,870 mt in October from 277,547 mt in September. The largest quantities of import slabs arriving in the US during October 2008 came from Mexico, at 165,874 mt; Ukraine, at 69,976 mt; Brazil, at 55,243 mt; Canada, at 49,006 mt; and Russia, at 40,446 mt. Other smaller slab sources during this period included Japan and Germany. The import quantities are expected to show a significant decrease for November and December arrivals.
As for billets, international prices increased in the first half of November, mainly due to the interest from Turkish rebar and merchant bar rolling mills and the temporary acceptance of higher finished steel prices. However, in the second half of November, demand from the international finished product markets weakened and long product prices started to decrease again, so billet prices followed the downward trend. As in the slab market, the current billet market is sluggish, and demand is low.
SteelOrbis has learned that offers of ex-CIS billets from CIS ports are standing at the levels of $320 to $350/mt FOB for December/January shipments. This pricing level increased approximately $60 /mt when compared to our last report on October 28. Two weeks ago, Turkish mills offered billet exports at $410 to $420 /mt FOB Turkey, reflecting an increase of approximately $40 /mt from about a month ago. Turkish billet producers tried to push prices up even higher than this level since then, but the slow finished product markets resisted the price increase.
The total amount of US carbon billet tonnage exported in September was 42,123 mt, which is 25,488 mt more than the figure of 16,635 mt in August. The main export destinations of US billets during the period were: Italy, at 15,237 mt; Dominican Republic, at 9,850 mt; Honduras, at 7,720 mt; and Ecuador, at 4,966 mt. Other countries that also received US billet exports include Canada, Mexico and Venezuela.
The total amount of billets imported into the US in October 2008 was 39,619 mt, which reflects a decrease of 5,061 mt compared to September. Steel Import Monitoring and Analysis System (SIMA) data show that during October, the US mainly imported billets from: Mexico, at 20,678 mt; Canada, at 12,927 mt; and Brazil, at 5,280 mt. Japan and United Kingdom also exported some tonnage of billets to the US during the month.