The US semis market remains quiet, as the slumping steel production is still negatively affecting demand.
On the billet side of the US semis market, supplies remain plentiful but weak demand is persisting due to the sluggish finished products market and uncertain economy. As a result, re-rollers are holding off from purchasing until they are sure that finished product prices won't dip further, and most of them do not expect the finished sector to rebound until late 2009 or early 2010.
Billet prices are now at the level of $400 to $425 /nt ($441 /mt to $468 /mt or $20.00 cwt. to $21.25 cwt.) delivered. This figure is approximately $1.25 cwt. ($28 /mt or $25 /nt) less than a month ago. All steelmakers have adjusted their output according to the lack of demand, and they have been adjusting their steel prices along with their decreases in raw material costs (for the most part). However, with the current longs prices, there is not much further room for billet prices to fall, and lack of billet transactions is also helping to keep prices somewhat stable.
Internationally, billet prices have come down approximately $80 /mt from a month ago because of the softening prices in the finished product markets in Europe and the CIS. In addition, the weakened billet prices have recently encouraged Turkish producers to purchase CIS billets rather than buying scrap and converting them in their electric arc furnaces. Ex-CIS billets are currently offered at about $320 to $330 /mt FOB Ukraine from traders and not below $330/mt FOB from producers, while Turkish producers are offering billets to the export markets at price levels of $360 to $370 /mt FOB.
As for billet imports into the US, tonnage remained more or less stable in January over December, while full-year figures for 2008 reflect a moderate decrease from 2007. The total amount of billet imports into the US in January 2009 was 14,873 mt, which represents a small increase of 890 mt from December 2008. Data from the US Department of Commerce's Steel Import Monitor show that in January the US mainly imported billets from: Russia, at 9,940 mt; Canada, at 2,491 mt; and Brazil, at 1,260 mt. Japan, Mexico, and United Arab Emirates also exported some tonnage of billets to the US during the month.
Looking at 2008, the total amount of US billet imports was 452,697 mt, reflecting a decrease of 60,349 mt when compared to the figure of 513,046 mt in 2007. In 2008, the US mainly imported billet from: Canada, at 175,690 mt; Mexico, at 107,443 mt; Brazil, at 106,563 mt; Belgium, at 21,389 mt; Germany, at 17,209 mt; and Russia, at 10,476 mt. The US also imported slab from Japan, Switzerland, China, Ukraine, and Italy in the same period.
On the export side, the total amount of US carbon billet tonnage exported in 2008 was 141,638 mt, which is an increase of 0.6 percent when compared to the figure of 140,844 mt in 2007. The main export destinations for US carbon billets during the year were: Dominican Republic, at 25,278 mt; Taiwan, at 23,555 mt; Italy, at 17,503 mt; Ecuador, at 15,239 mt; and Canada, at 12,834 mt. Other countries that also received US billet exports in 2008 include Chile, Mexico, Colombia, Vietnam and Venezuela.
The slab market is also weak, due to the same problem billets are experiencing -- high inventories and soft demand. There are hardly any slab transactions to be seen in the US. Nevertheless, some slab transactions are observed to be concluded in Asia, and, compared to a month ago, international slab prices have not changed much despite the weak demand.
Brazilian slab still ranges from approximately $340 to $350 /mt CFR, the same range as a month ago. But with some continued softening in the global flat rolled markets, market sources expect that slab prices may see some more decreases in March and possibly into the second quarter. Going forward, iron ore contract negotiations will also play an important role in slab prices. If the iron ore prices decrease by 30 to 40 percent like most Chinese mills expect, slab prices may see another big decrease, bringing them close to the $300 /mt level, or perhaps lower.
The total amount of slabs imported to the US decreased to 148,239 mt in January 2009 from 152,399 mt in December 2008. The largest quantities of import slabs arriving in the US during January 2009 came from Russia, at 147,528 mt. Other smaller slab sources during this period included Italy and Germany.
For the entire year of 2008, the US imported a total of 4,535,062 mt of slabs, which is 318,355 mt less than the figure of 4,853,417 mt in 2007. Top countries that exported slab to the US in 2008 were: Mexico, at 934,456 mt; Ukraine, at 924,780 mt; Canada, at 762,458 mt; Brazil, at 723,346 mt; Russia, at 663,126 mt; and India, at 242,922 mt. Some other countries that also exported slab to the US in the corresponding period included Australia, Poland, Italy, Germany and Belgium.