The slab market has been passing through an uncertain period. Demand and supply fundamentals are changing while unconventional market forces are influencing prices. It has been a wild ride for slab prices in recent months. The recovery in slab prices seen in November 2018 was short lived. Prices started to fall drastically from December.
In the US, record volumes of Brazilian slab were imported in September and October. Slab buyers in the US rushed to purchase as much as they could before the quota exhausted so they could avoid the 25% duty. In October alone, almost one million tonnes of slab left Brazilian ports for the US.
So far the Trump administration has not taken any actions to penalise the US slab importers for buying beyond the 3.5 million tonnes limit last year. Commodity Inside assesses that the US slab imports from Brazil exceeded the quota by nearly 2 million tonnes.
As a result of high stocks and the winter season, buying activity dropped in December and January, removing support for prices. Hence, the US slab prices plunged between November 2018 and January 2019.
With Brazilian prices fell, CIS exporters are also forced to move their prices down to remain competitive. The situation exacerbated with lower demand in Asia. Commodity Inside understands that slab prices could have fallen even more, if it wasn’t the forced reduction of exports from Iran, due to the reinstatement of US sanctions. Going forward, there are both upside and downside risks for slab prices in short to medium terms where availability of slab can be the main determinant force.
This article is based on the February 2019 quarterly update of our report “A Five Year Strategic Outlook for the Global Merchant Slab Market”.
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