Posted on 09 Jun 2022
Global merchant slab prices continue to decline in line with the general global downward trend, as it splits into a two-tier pricing system. With Iran and Russia on the lower priced tier and somewhat limited sales geography, prices for their slab are around $200-250/tonne below offers from India, Saudi Arabia and Brazil currently, Kallanish observes.
As the end of the second quarter draws near, the market sentiment is contrary to the end of the first and beginning of second quarters, when re-rollers in Europe, Mediterranean and North America were scrambling to replace CIS supply, unavailable due to Russian invasion of Ukraine. Although Ukrainian supply is still unavailable due to damage to plants and ongoing fighting (see Kallanish passim), Russian slab is being sold at lower prices, alongside Iran.
It is mostly imported by China, as Southeast Asian buyers remain largely on the fence, not only in adherence to financial sanctions, but also due to the ongoing weakening of the flat product segment. The pricing to Southeast Asia is not clear, as there are no requests for material right now, traders say. The ongoing talk of Chinese trading re-exporting Russian slab at higher prices as their own has been deemed as an unfounded rumour by the majority of market participants Kallanish spoke to.
"There could have been some small occurrences of this, executed by small one-day traders, but no self-respecting trader would get involved in this. It is a criminal offence, and it does not make sense - companies can buy Russian slab and export their own, making similar profits, with no risk," one major trader summarises.
Latest offers of Russian slab to China were tabled at $610-630/t cfr last week, with counters at $580-600/t cfr being rejected. Traders expect China will end up booking Russian slab at $590-600/t cfr, as Russian mills' production costs are increasing, and output is falling, drawing a floor on current Russian slab price correction. Increasing demand is also likely to support prices, traders note.
Turkey is also buying Russian slab, but with exceptions, also due to sanctions. Those companies that rely on export market for their finished product sales are not looking at Russian slab, paving the way to Asian and Saudi material, as Brazilian slab remains out of their pricing bracket for now. Russian slab in Turkey is offered at $570-580/t cfr, while Brazilian offers are still starting at $800/t cfr, traders say.
Europe is receiving Asian slab booked in the end of February and March, and only few companies continue to use Russian material, including those with some Russian ownership. Offers of Indian material into Europe were at $800-830/t cfr late last week, but there was no interest after the idle May, and in receipt of previously bought volumes.
Source:Kallanish
