GLOBAL SLAB WRAP: Prices rise further on reduced supplies, rising flat steel values

Global slab prices continue to increase in August and early September, pushed up by reduced availability and rising flat steel prices.

After rising in all regions in August, prices appear to be close to a maximum as offers from the CIS and Brazil reached $500 per tonne fob in early September.

“Buyers are more resistant to price increases,” a source said.

However, there is no consensus about how long the strength in slab prices will persist. Market participants expect demand for the product to be maintained with a seasonal pick up as the year-end approaches.

“If slab prices hold firm during the month of September, then they are less likely to fall [for] the rest of the year,” another source said.

According to market participants, the uptrend in flat steel prices from China and higher billet prices have been behind the price increases in slab.

In the CIS region, slab output continued to be low as mills focused on in billet production because of the higher margins, and slab batches for September production were mostly sold out by late July.

In the first week of August, slab prices were $425-430 per tonne fob Black Sea, compared with $415-430 per tonne fob Black Sea in late July.

By mid-August, no volumes were available for CIS-origin slab for September production, while customers from Turkey and Italy were under pressure to secure volumes.

At the time, market participants were betting that prices would soon reach $490 per tonne fob Black Sea as by then prices had already reached $450 per tonne fob Black Sea. 

And by the end of August, CIS slab offers were close to $470-480 per tonne fob Black Sea.

Some customers, however, preferred to take a wait-and-see approach, hoping for a downward correction. 

Additionally, a maintenance stoppage at one CIS producer only added to the limited availability of the product.

In early August, Brazilian producers launched offers for October shipments at higher prices, as demand was increasing and offers from other regions were low.

At the time, some buyers were reluctant to accept such high prices, but bids were heard around $420-425 per tonne fob.

However, slab producers in the country were not willing to negotiate below $430 per tonne fob.

Then, increased buying activity from Turkey boosted prices in mid-August. Buyers in the country were accepting high-priced offers as they needed to secure volumes, as local steelmakers and CIS-based slab producers were mostly focused in producing billet.

Buyers in Turkey were willing to pay $450-460 per tonne fob, while offers were already reaching $470 per tonne fob.

There was also strong demand from North American buyers, mainly Mexico, during the month. 

By the end of August, deals were closed to North America at $460-465 per tonne fob, while Turkish clients were paying close to $470 per tonne fob.

Still backed by strong demand from Turkey, offers were then lifted to $480 per tonne fob.

In early September, Brazilian mills renewed offers for November shipments, mostly at $500 per tonne fob and above.

Several deals were closed at around $495 per tonne fob in the first week of the month, but more recently companies have been seizing the opportunity of low availability to launch offers at around $510 per tonne fob, or even higher.

“Clients do not have many suppliers with volumes available, so they have to keep all options on the table,” a source said.

Southeast Asia
In early August, slab buyers in Southeast Asia faced a sharp increase in prices from most producing regions, while finished steel prices in the region did not increase at the same rate.

As a result, slab offers were as high as $470-480 per tonne cfr from the CIS and India early last month, with offers from South Korea reaching $500 per tonne cfr.

Meanwhile, buyers were willing to pay around 440-450 per tonne cfr. The mismatch between bids and offers resulted in a lack of buying activity in early August.

Buyers in Indonesia, for instance, were turning to local producers such as Krakatau Posco, which was able to offer the material at $460 per tonne delivered.

Iranian slab was also on offer in Indonesia at $450 per tonne cfr, but no bookings were made due to credit issues related to Iran-origin material.

In the following weeks, offers from Brazil and the CIS quickly climbed to $490-500 per tonne cfr due to low availability.

“Whoever can make billet, makes it now,” a Singapore-based trader told Metal Bulletin at the time.

Then Indonesia’s Krakatau Posco reduced its presence in the export market, diverting most volumes to supply domestic re-rollers.

In early September, Asia’s slab import prices continued rising amid a strengthening of the global flat steel markets. 

Offers from Brazil were heard at $520-530 per tonne cfr, while Iranian material was offered to Indonesia and Thailand at $515-520 per tonne cfr in the first days of the month and South Korean slab was offered to Indonesia at $510 per tonne cfr.