GLOBAL SLAB WRAP: Prices up due to rises in Chinese flat steel

Global slab prices started an upward trend in July which has continued into early August as the market was affected by repeated increases in flat steel prices from China.

Export prices for China-origin hot rolled coil (HRC) reached $495-505 per tonne fob on July 25, up from $465-475 per tonne fob on July 4.

Similar movement was seen on the raw materials side, with iron ore prices going higher than $70 per tonne in late July.

After falling in the previous month, slab export prices in the CIS region started a recovery in July, due to the growth in finished steel and raw materials prices.

In the first week of July, Russian and Ukrainian producers were offering material at $400-410 per tonne fob Black Sea, up from $390 per tonne fob Black Sea in June.

No bookings were heard at this time, but there were signs that clients were starting to accept higher prices.

A Turkish buyer was bidding $395 per tonne fob Black Sea, up by $25 from bids heard in the second half of June. Meanwhile, in Southern Europe, bids were coming in at $400-410 per tonne cfr, or around $384-395 per tonne fob Black Sea.

By mid-July, offers from the CIS had reached $415-425 per tonne fob Black Sea, with bids at a maximum of $410 per tonne fob Black Sea, while some deals were heard in Southern Europe at $420-425 per tonne cfr.

A spike in global billet prices added pressure to the slab market, as mills in the CIS which are able to produce both materials shifted part of their production to billet, because it was more profitable than slab.

On July 31, Metal Bulletin’s CIS export billet index was $446 per tonne fob Black Sea, compared with $407 per tonne fob Black Sea on July 3.

Due to this trend, slab availability remained subdued for the rest of the month, and by the end of July offers had increased to $415-430 per tonne fob, depending on the destination.

Early in August, offers from the CIS rose again, and on August 7 the CIS slab export price reached $425-430 per tonne fob Black Sea.

Brazilian slab export prices started last month with a rise of around $10 per tonne, as local companies also started to increase their offer prices.

Market participants believed that a reaction in slab prices was overdue, as finished prices from China had been on an upward trend since mid-April.

By the week of July 13, a deal for slab was closed just below $400 per tonne fob, which made producers expect that prices would soon break this threshold.

After this deal, $400 per tonne fob became a floor for all the following negotiations, with producers unwilling to accept any bids lower than this price.

Amid the continuing strength of the Chinese flat steel market, some local producers started to hold back their offers while they waited for the market to achieve higher prices.

And as material became scarcer, buyers started to accept the higher offers in order to secure deals.

By the end of July, producers were expecting prices to reach $420 per tonne fob, though buyers were still bidding within the range of $390-410 per tonne fob.

The same trend persisted into early August. Brazilian producers had little volume available, and when buyers were starting to accept prices as high as $420 per tonne fob, offers were around $430 per tonne fob.

More recently, offers from the country could not be heard at less than $430 per tonne fob, according to market participants.

Southeast Asia
With the increase in offers from the CIS and Brazil, higher prices reached Southeast Asian clients in early July, but importers were resistant to the increases.

Offers from Russia and Brazil were heard around $420-430 per tonne cfr at the time, but re-rollers were considering purchases from local producers, such as Krakatau Posco.

In mid-July, news of a booking in Indonesia of a 40,000-tonne cargo from Brazil at $415-420 per tonne cfr led prices into another round of increases.

At the time, this price was considered to be low, compared with the cost of material from other origins. Russian material was available in the region at $425 per tonne cfr at the time.

Meanwhile, South Korea’s Hyundai Steel was offering slab to Indonesia at $430 per tonne cfr, but no bookings were confirmed at this price.

At the beginning of the following month, producers from most regions were waiting for prices to pick up further, and reduced availability helped to push prices even higher.

Offers from Brazil and the CIS were largely absent in early August, but sources believed that Russian mills would only accept prices as high as $440-450 per tonne cfr.

A 40,000-tonne cargo of South Korea-origin slab was heard booked in late July by an Indonesian re-roller at $430 per tonne cfr, for September shipment.

And a 10,000-tonne cargo of Indonesian slab was sold to a Malaysian re-roller at $445-450 per tonne cfr, Metal Bulletin learnt in early August.

More recently, Asia’s slab import prices surged as bookings were reported at $435-440 per tonne cfr, with price indications moving up to $440-450 per tonne cfr.

However, slab offers from the CIS and India have now been heard at $470-480 per tonne cfr, although Iran-origin slab was heard available in Thailand at $440 per tonne cfr and in Indonesia at $450 per tonne cfr.

Vlada Novokreshchenova in Dnepr contributed to this report.