Global merchant slab prices have diverged considerably, as material origin has become the value identifier amid Russia’s invasion of Ukraine and consequent sanctions on Moscow.
The addition of religious holidays in various regions throughout April have further emphasised the split, as China became the largest buyer of Russian slab. Small volumes of the same origin were traded in the Mediterranean and offered to Latin America, where regional material is offered and sold at much-higher-than-Russian values, Kallanish learns from market participants.
Prices of slab from Asia into Europe and Turkey have softened somewhat, but offers were sparse due to Ramadan and previously acquired vast tonnages. These came at around $950-1,050/tonne cfr for Chinese, Iranian, Indonesian, Malaysian and Vietnamese slab, depending on destination and grade. Around 0.5 million tonnes were acquired in six weeks between March and April, in the absence of Ukrainian slab and difficulties sourcing Russian material.
The replacement of missing CIS volumes by Asian-origin material at relatively acceptable prices in Europe has calmed the frantic sentiment that formed in early March. It also satisfied the need for Brazilian-origin imports into the eastern hemisphere – a pricey and long-lead-timed exercise, as Brazil continues to supply the US and the region at considerably higher prices, traders note.
Although lower by around $100/tonne versus mid-April, Brazilian slab is still at some $1,200/t fob this week to the US and $1,080/t fob to other North America, including Mexico. In the latter, Russian slab is available at lower prices, but contains reputational and logistical risks. Mexican slab offers were surfacing at a lower, $950-980/t fob over the past fortnight.
Meanwhile, Russian slab is currently directed to Asia, and mostly China, at prices not exceeding $700/t cfr, and in volumes almost matching early-Covid-19 pandemic levels. Again, up to 0.5mt of Russian slab is heard to have been contracted to China in the past two months, starting from $800/t cfr at the beginning of March and moving towards below $700/t cfr in bid targets in the last few days.
Turkey, a staple CIS slab buyer, is not in the market for Russian slab, according to various sources, but Europe is still buying small quantities from the non-sanctioned Russian firm. Supply is difficult due to logistical and financing constraints, and prices are not exceeding $800/t fob Black/Baltic Sea, but “possibly lower”, according to several sources, who cite weakening sentiment in the European flat products market.