Posted on 19 Feb 2019
CIS-origin slab prices achieved last week were above buyers' expectations, Kallanish learns from buy- and sell-side sources.
CIS-origin slab was sold to southern European buyers at $480-485/tonne cfr, netting back to around $460-465/t fob Black Sea, these sources confirm. Having prepared to enter negotiations at $460/t cfr, European mills accepted a $20/t increase, and are now likely to be facing another $20/t increase in the next round of sales. Mills confirm the next round of price negotiations will begin at $500/t cfr.
A tangible shortage of material, amid seasonally-rising demand for hot and cold rolled coil, coupled with uncertainty in the iron ore market, are all contributing to the rise. An occasional northern Russian supplier is focussing on HRC sales both at home and for export, and has no slab to offer. Another major merchant slab supplier is in the midst of blast furnace closure for repair and is supplying its re-rolling subsidiaries in Europe and the US.
A Ukrainian supplier has issued a letter to customers forewarning of a shortfall of around 200,000t of winter-produced slab, with some buyers estimating a slightly higher tonnage. A third Russian slab supplier, sold out of March, is preparing to enter the market with April volumes, but is likely to sell the majority of product to Asia, where it has a considerable foothold.
Meanwhile, alternative Brazilian suppliers of slab are focussed on the US, with import prices having touched $535/t cfr, buoyed by seasonal demand growth. These suppliers are facing reduced supply of pellet for on the back of Vale's metallics supply cuts.
Rough estimations place global demand for slab in the next quarter at 10 million tonnes, exceeding available supply by around 15-20%.
