Brazilian steel mills steamroll Q3 quota for slab exports to US

Posted on 27 September 2018
 

Source: S&P Global Platts

 ArcelorMittal Brasil, Companhia Siderurgica Do Pecem (CSP) and Ternium significantly exceeded Brazil's third-quarter 2018 quota for slab steel exports to the US in a rush to capture what will be left for the final three months of the year, according to data analyzed by S&P Global Platts. 

Brazil's 2018 annual export quota to the US is capped at 3.51 million mt, but no more than 30% of the quota is allowed to be available to the market in a single quarter.

Brazilian steelmakers filled the Q3 quota by September 7, according to US Customs and Border Protection data.

Still, it has not stopped shipments as any material exceeding the allotment will be made available at the beginning of the fourth quarter.

In what has become a Brazilian slab arms race, the steelmakers are now rushing to get their material to the US, which is likely to cause a front-loaded Q4.

ArcelorMittal Brasil has exported 646,048 mt of slab to the US so far in Q3, according to data from Panjiva, a division of S&P Global Market Intelligence. The majority of the slab was sent through the Port of Mobile in Alabama to support its Calvert sheet mill, a joint venture with Nippon Steel & Sumitomo Metal of Japan also in Alabama.

Three separate shipments totaling 206,324 mt of slab went to the mill from Brazil, but no shipper was listed on the data.

ArcelorMittal Tubarao, located on the southeast coast of Brazil, has a total annual production of 7.5 million mt of slab.

CSP was a close second to ArcelorMittal in terms of Q3 volume, but as a relative newcomer to the slab market it has looked to capture some new markets in the US disrupted by Section 232 tariffs.

CSP customers in Q3 included ArcelorMittal, California Steel Industries, JSW Steel USA, NLMK and Nucor.

The steelmaker produced its first slab just over two years ago, which is problematic given how the US calculated the annual quota. The quota calculation was based on the three-year average of slab exports to the US between 2015 and 2017. However, the country's slab making capacity increased by 3 million mt/year with the addition of CSP in the middle of 2016.

In total, CSP has exported 598,664 mt to the US so far in Q3, according to the Panjiva data.

FRONT-LOADED QUOTA CRUNCH

Panjiva shipment data and import licenses indicate a significant amount of additional material will be released in October.

According to Panjiva data, US companies have already received 602,252 mt above their Q3 quota limit.

US Census data and import licenses for Q3 through September 26 indicate an excess of 414,500 mt of slab above the allotment.

The excess material made available in Q4 quarter will be accompanied by up to another 509,000 mt of slab set to arrive through October, according to data cross referenced between S&P Global Platts' cFlow trade flow software and shipping agencies.

 

Ternium is set to ship 315,000 mt to the US, with a shipment to Los Angeles, Mobile and three unspecified destinations, according to the data. CSP is set to ship 194,000 mt to the US by the end of October.



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