GLOBAL SLAB OUTLOOK: Prices expected to remain weak with low flat steel markets
Prices in all producing and buying regions have been falling, following a downtrend in flat steel markets. There is no expectation of upside in the following weeks, according to sources.
Import prices of the semi-finished product in Asia are likely to remain soft for the remainder of this month amid the sustained weakness in the region’s finished flat steel markets. No upside is expected in the coming weeks.
In particular, slab market participants have been keeping an eye on the Chinese hot-rolled coil market.
One trader in Taiwan said he anticipates Asian slab prices will drop to $420-430 per tonne cfr if regional HRC prices decline to $480-490 per tonne cfr.
“Prices of slab will probably keep stable or fall, but we will have to watch the HRC price movements in China to make sure,” a plate maker based in East Asia said.
Following a truce in the trade spat between the United States and China, domestic Chinese steel prices rebounded on December 3, ending their months-long decline. But the prices did not maintain their upward momentum for the rest of that week.
A few slab buyers in Asia took a wait-and-see approach during the week ended December 10, amid the fluctuations in Chinese HRC prices.
Fastmarkets MB’s fob China HRC Index stood at $477 per tonne on December 3, before rising and falling several times to reach $475.50 per tonne on December 12.
“China’s steel plate market has also weakened a lot, so it will probably result in a deep price correction for slab in Asia to fall below $450 per tonne cfr [in December],” a trader in Indonesia said.
Fastmarkets MB’s weekly export price assessment for Chinese commercial-grade, chromium-added plate was $500-510 per tonne fob China on December 11, down from $560-570 per tonne fob on November 6.
In Indonesia, the country’s fluctuating exchange rate also damped import appetite recently. Another Indonesia-based trader predicted that slab demand would improve if and when the currency stabilized.
Indonesia’s currency was trading at 14,559 rupiah to $1 on December 17, compared with 15,210 rupiah to $1 on November 1 and 14,899 rupiah to $1 on October 1, according to exchange rate website Oanda.com.
Slab producers in the Commonwealth of Independent States reduced offers for slab at the beginning of the month - pressured by the decline in the HRC segment as well as by customers’ expectations of lower prices.
Few recent offers of CIS slab were heard at $430-435 per tonne fob Black Sea.
But market sources indicated that deals could be concluded at $420-425 per tonne fob Black Sea.
Iranian slab export prices have already dropped by $15 per tonne since the beginning of the month, from $400-410 per tonne fob to $385-395 per tonne fob.
Iranian mills had to cut prices following the general downward trend in the market - as well as due to the increased risks of purchasing from the country due to the US sanctions.
However, a cargo of Iranian slab was sold to Thailand at $430 per tonne cfr, including $35 per tonne freight cost, the cost of finance and trader’s margin, sources said. That would be equivalent to $390 per tonne fob.
Market participants believe that in the coming weeks prices will move even lower, given lower expectations from Asian customers as Iran has limited alternatives for export destinations.
Prices of Brazilian slab have been falling in November and in early December because of a downtrend in finished steel prices in most regions. But sources believe prices have reached a bottom in recent days.
The Brazilian slab export market is mostly reacting to demand in the United States and Canada.
“Prices have reached a minimum limit now,” a source said. “There is a movement from buyers in North America to accelerate bookings for February shipment.”
The increase in buying activity - mostly in the US - could be a result of higher price expectations for bookings in January for shipment in March, according to sources.
In the US, slab offers have been around $475 per tonne fob, while bids are around $465 per tonne fob. Prices have been influenced by sluggish market of finished flat steel.
Fastmarkets MB’s weekly assessment of Brazil’s slab export prices was $430-475 per tonne fob on December 14, down from $435-495 per tonne on November 30 and from $505-515 per tonne on November 2.
Fastmarkets’ US domestic hot-rolled coil index was $734.60 per short ton on December 14, down from $748.20 per ton on November 30 and from $825.20 per ton on November 1.
Offers and bids involving Brazilian material were also reported in Europe, where prices were lower due to competition from CIS producers. There, Brazilian material has been traded at around $430-440 per tonne fob.
“I believe prices of Brazilian material in Europe will remain unchanged for March shipments, if demand in US and Canada allows,” a source said.
Fiona Lam in Singapore and Vlada Novokreshchenova in Dnepr contributed to this report.