Merchant slab enquiries rise as supply dwindles

Traders tell Kallanish they have been receiving more merchant slab enquiries so far this year, but availability remains tight, making it difficult to satisfy customers’ requirements. Increasing power costs are driving some mills to consider importing slab instead of making crude steel, the practice that was widespread in the 2000s.

CIS merchant slab suppliers have been developing their downstream capacities throughout the last decade, and ended up with significant flat rolling capacities of every type – plate, hot rolled coil, sheet – in Europe and the US. Since flat products demand went through the roof after the first Covid-19 lockdowns in 2020, these producers have been sending more slab to their own mills, reducing available merchant availability. At the same time, they have also been expanding downstream capacity in Russia and Ukraine, curbing availability further. 

Ukraine’s Metinvest did commission a new 2.5 million tonnes/year continuous slab caster at its Mariupol Ilyich Iron and Steel works in the first quarter of 2019, but it also re-rolls the bulk of its output at the relatively new 1700 rolling mill. This balanced out supply of pig iron, but merchant slab availability has not increased much, especially considering Metinvest’s slab requirements in Italy. Supply issues with coking coal in Ukraine in the past six months also restricted production somewhat.

NLMK, the largest CIS merchant slab supplier, also reduced its availability in 2021 on the renewal of slab shipments to its US assets, and higher in-house requirements both in Russia and Europe. Other, relatively opportunistic Russian suppliers such as Severstal and MMK are also not seen offering slab due to seasonally high demand for their flat products now.

Brazil is continuing to supply the US and the region. The recent rain season has not hampered production volumes drastically, but it tightened output and shipments. No Brazilian slab was seen in the eastern hemisphere in the past year, save for one lot, due to ample demand in the west and high prices, driven by America’s strong flats market. European and Turkish re-rollers were seen enquiring for Brazilian slab this year, and some tonnages may be sold, depending on regional demand and prices, traders muse.

Meanwhile, Turkey, one of the largest merchant slab buyers, has not been importing as much as it used to (see separate article) due to high prices and higher reliance on domestic production instead of billet. Overall, the trend is likely to continue. With all the extra capacity coming on stream in Turkey, slab will probably become like billet – imported more when the price spread works, and less when it does not. Power prices are likely to remain an issue, so mills will remain on the lookout for slab, especially as scrap and iron ore prices are not showing signs of letting up.

Katya Ourakova UK