GLOBAL SLAB WRAP: Prices start recovery after weak June

Global slab prices weakened in June, largely due to the seasonal slowdown and lower raw materials prices, but started to recover in early July, following rising Chinese steel prices.

CIS
CIS slab producers started June with low availability, which helped them maintain prices close to the high levels seen in late May.

Meanwhile, a reduction in finished steel prices in most regions early in the month made re-rollers more cautious about purchasing slab.

Metal Bulletin’s weekly assessment of CIS-origin slab export prices was $400-405 per tonne fob on June 5, marginally down from $405-410 per tonne fob a week earlier.

In the following week, CIS slab prices fell again to $395-400 per tonne fob.

Later in June, CIS mills had to reduce their offers even further as they faced strong competition from suppliers in Brazil and Iran.

At the time, Brazilian companies were offering material to Europe at $400 per tonne cfr, while Iranian cargoes were being sold at around $390 per tonne cfr.

CIS mills reduced their offers to $390 per tonne fob, but the reduction was not enough to secure deals as, in Europe, the viable price level for slab from the CIS region was said to be around $385 per tonne fob Black Sea.

In Turkey, bids were coming in at around $374 per tonne fob.

The competition between Ukrainian and Brazilian slab producers was said to be also influencing plate prices in Europe.

"The contest between Ukrainian and Brazilian slab producers is not helping the stability of the [steel plate] market," a representative of an Italian re-roller told Metal Bulletin. 

At the beginning of this month, this trend started to reverse as rising flat steel prices, iron ore and scrap costs motivated CIS mills to increase offers.

Bids from Turkey started to pick up, reaching around 415-425 per tonne cfr in the week of July 5, which led market participants to believe the price increases in the CIS were likely to hold.

In Southern Europe, buyers were willing to pay as much as $400-410 per tonne cfr for the material.

Southeast Asia
In Southeast Asia, import prices felll in June, as the market was affected by a seasonal slowdown.

In mid-June, slab prices in the region fell below $400 per tonne cfr, amid renewed competition between major slab suppliers.

A slab re-roller in Indonesia launched a tender for 20,000 tonnes for August-September shipment, which was won by a local supplier at around $400 per tonne delivered, sources said in the week of June 14.

Brazilian offers in this tender were heard at $400-415 per tonne cfr at the time, while a CIS supplier was willing to sell the product at just under $400 per tonne cfr.

In Taiwan, offers from Russia were heard at around $390-395 per tonne cfr, but buyers were not willing to pay more than $380 per tonne cfr in mid-June.

In Thailand, the market remained slow, as inventories from re-rollers were filled, especially with Iranian material.

Trading remained week for the rest of the month, with slow regional demand and the celebration of the holy month of Ramadan in Indonesia.

As a result, prices continued at $395-400 per tonne cfr until early July, when the increase in flat steel prices started to affect the market.

In July, tenders in Indonesia were launched for 20,000-30,000 tonnes of the product, but the relatively small volumes made freight rates too expensive.

Offers from both Brazil and Russia were heard at around $420 per tonne cfr or above, while sources believe a viable price would be closer to $410 per tonne cfr.

Also this month, Krakatau Posco offered slab to neighbouring Malaysia and Thailand at $395 per tonne fob, or $410 per tonne cfr, a market participant told Metal Bulletin.

Iran
In June, reports published by Iranian media outlets said Austria was extending a credit line to help build a steel plant in Iran’s southern Gol-e-Gohar region. This was immediately denied by the Austrian government.

However, sources in both countries confirmed that a steel project deal has been agreed between companies from Iran and Austria.

The steel plant will have the capacity to make 2.80 million tpy of slab, according to an Iranian source.

Since slab capacity in Iran is already higher than hot rolled coil (HRC) production capacity, the excess material will be destined for export, which could put pressure on global prices.

Brazil
In Latin America, prices for Brazilian material were around 370-380 per tonne fob in early June. 

At the beginning of the month, Brazilian steelmakers were heard offering slab at $380 per tonne fob to Europe and Southeast Asia.

However, the market in Asia was weak, and in Europe bids were heard at as low as $370 per tonne fob.

In June, Brazilian slab supply was limited because of an accident in CSP’s steel mill area on May 28, which forced the company to stop production.

Operations resumed on June 21, but market participants said production was still lower than levels prior to the accident.

In mid-June, companies were heard offering inventory material to clients in Asia. At the time, bids for this material were heard at as low as $350 per tonne cfr India.

In the end of June, slab suppliers in Brazil were heard to be in waiting mode, as flat steel prices from China were persistently rising.

In early July, offers started coming at as high as $390 per tonne fob, while buying interest remained close to $380 per tonne fob.

Recently, an order was booked slightly below $400 per tonne fob, Metal Bulletin understands.

Following a consultation period with market participants which ended on July 2, Metal Bulletin changed the specification of its Latin America’s slab export price for future market price assessments.

The Latin America export slab $ per tonne fob main port series was discontinued, and replaced with the Brazil export slab $ per tonne fob main port.

Section 232
Since late May, several market participants have voiced concerns about the Section 232 investigation, into the alleged national security threat posed by steel imports into the USA.

The port of Los Angeles showed worries about possible tariffs against slab imports, which could affect the port’s operations, as it handles around 1.50 million tonnes of slab per year for California Steel Industries.

"We respectfully ask you to consider the significant [effects] of the importation of slab steel on the port of Los Angeles and the local and regional economy," the port executive director Eugene Seroka said in public comments to the US Department of Commerce.

The investigation made US customers more hesitant about new slab purchases.

But some slab producers had hoped that the government would exclude slab imports from any eventual measures, which would be reflected in higher prices.

"If slab imports are excluded, it would be very positive for us," a source in a slab producer said.

More recently, at least one slab order was booked from a US re-roller, according to sources.

"Too many companies in the US depend on third-party slab," a source said. "Even if a tariff is applied, the USA would have to continue importing slab," the source added.



Vlada Novokreshchenova in Dnepr contributed to this report.

Felipe Peroni

felipe.peroni@metalbulletin.com

Published

Felipe Peroni

July 14, 2017

21:06 GMT

São Paulo