Steel slab and the US quota dynamics

The US slab buyers have started returning to the market while booking slab from Brazil by using the remaining annual quota (less than 0.5 Mt) in October. This has helped Brazil’s export prices, which reduced its loss to just USD 5/t, from August levels. However, Commodity Inside assess that the exports quota is likely to be fulfilled in early October, as there are volumes currently stored in free-trade zones in the US, waiting to be cleared.

Although low supply from Brazil could result in prices hike in the US, demand for HRC in the US is likely to reduce, as fears of economic slowdown looming. Moreover, US buyers can now also source slab from Canada and Mexico. These countries are not able to fully replace Brazil in terms of tonnages. However, re-rollers in the US can use these small tonnages to help maintain production at low levels. Finished steel imports from both countries could also reduce the need for the imported slab.

In Asia, there has been aggressive competition from Russian and Indian suppliers of HRC, as well as subdued demand for finished steel in important slab importing countries, such as Indonesia, Thailand and Taiwan. This caused slab prices to fall much lower when compared to Brazilian prices. Meanwhile, the downward trend has also been restricted as slab suppliers refused to lower their offers much further, arguing that they would not be able to recover production costs.

This article is based on our recently published annual report Global Merchant Slab Market Outlook. The subscription consists of monthly slab market updates along with three quarterly updates and one major report.

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