GLOBAL SLAB WRAP: Prices weaken amid falling flat steel, raw materials values

Steel slab prices in the global market rose through much of September on a combination of tight availability of the material and strengthening in the billet and finished flat steel market sectors.

But slab prices eased back toward the end of the month as sentiment in the global steel market turned bearish.

The reversal of the uptrend in the Chinese steel market which pushed prices down again, together with the weakening of the raw materials markets, triggered the fall in slab prices.

In early September, Brazilian mills renewed their price offers for November shipment slabs, mostly at $500 per tonne fob and above. This compared with $480 per tonne in late August, following the rise in flat steel prices in China.

The producers were also benefiting from the reduced availability of slab in other regions, such as the CIS, Middle East and Asia. This came about because some mills had changed their focus to billet production, amid favourable pricing conditions and increased demand for that product over the past several months.

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

The beginning of the month in Brazil was also marked by the acquisition of Companhia Siderúrgica do Atlântico (CSA) by Latin American steel group Ternium.
In mid-September, a cargo of Brazilian slab was heard sold in Indonesia at a price close to $500-505 per tonne fob.

However, some clients were bidding less than $500 per tonne fob, cautious about the declining prices for iron ore and coking coal.

By the end of the month, the slab market was affected by a strong drop in the prices of hot rolled coil (HRC) and steel plate in China.

“Buyers are more cautious, afraid they will not be able to secure a good selling price for finished material,” a source said.

Nevertheless, high-priced slab offers at $500-505 per tonne fob continued to be heard as most producers were in no rush to book orders.

In the CIS region, the beginning of September was also marked by a notable rise in slab prices amid reduced availability of the material.

Some mills were holding back offers of the product, trying to sell as much HRC as they could at better prices, because finished flat steel prices were peaking at that time, sources told Metal Bulletin.

Other mills switched to higher billet production because of the favourable pricing conditions and increased demand.

However, several cargoes of CIS-origin slabs were heard sold in Europe within the range of $480-500 per tonne fob Black Sea.

By mid-month, the reduced availability of slabs, together with higher finished flat steel prices, pushed CIS slab offers to new heights of $520-540 per tonne fob Black Sea.

With this increase, the CIS slab price reached parity with billet, which was assessed at $527 per tonne fob Black Sea at that time.

It was the first time since mid-June that CIS slab and billet prices had been equal.

However, CIS producers have not managed to achieve higher prices in deals because negative sentiment started to spread among customers following the weakening of the prices for raw materials, billet and finished flat steel by the end of the month.

The price of $500 per tonne fob Black Sea remained the highest level achieved in September.

At the end of the month, a cargo of CIS-origin slabs was sold to Europe at $490-500 per tonne fob Black Sea.

Southeast Asia
In early September, import slab offers in Southeast Asia and East Asia were varying within the range of $510-530 per tonne cfr, depending on the supplier, up from the indications of $490-500 per tonne cfr heard in late August.

Most customers were not ready to pay more than $500 per tonne cfr, however, so buying activity was muted.

But by mid-September, they had resumed bookings despite the continuation of the upward trend in prices, spurred by the reduced availability of slab in the global market.

A cargo of 10,000-15,000 tonnes of South Korea-origin slab was booked by an Indonesian re-roller at around $535 per tonne cfr.

The customer also purchased a cargo of Brazilian slab at $530-535 per tonne cfr, along with a small quantity of Iranian slab at $515 per tonne cfr.

And a 10,000-tonne slab cargo from Indonesia’s Krakatau Posco was reported sold to a Malaysian re-roller at $535 per tonne cfr, according to one source.

However, according to the producer, there were no bookings to Malaysia last week.

Late in the month, downward sentiment started to spread in the Asian slab market too, which was reflected in lower deal prices.

Several cargoes of South Korean slab were sold to Indonesia and Taiwan at around $520 per tonne cfr.

A smaller cargo was heard sold in Malaysia within the range of $530-540 per tonne cfr.

“We expect the price [for slab] to go down further,” one trader said, “but it will also depend on whether customers will still be hungry for billet.”

Felipe Peroni in Brazil contributed to this report.

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