Global merchant slab prices have softened, as new supply sources became established into the Mediterranean, and despite the ongoing absence of Ukrainian supply. Russian slab is available, but buyers, even in the countries with no sanctions, are becoming more reluctant to buy it, as trade is increasingly difficult amid new sanctions, Kallanish learns from market participants.
From around $1,000/tonne fob China in mid-March, offers of Chinese slab have declined to around $880/t fob this week, amid a tangible increase in the number of traders’ offers. Also available is Iranian, Indonesian, Malaysian and Vietnamese slab, with the latter heard selling to Europe at $950-1,060/t cfr, depending on destination and grade, and possibly including Turkey.
Italy, the most dependent on imported slab in Europe, is understood to have booked from all the above destinations, with one mill booking in excess of 400,000 tonnes of Asian slab, securing enough supply to last a quarter.
The increase in availability of slab at relatively low prices has already reflected on the flat products market, plunging it into stagnation. This had initially been attributed to a major overheating of prices and demand on feared shortages of feedstock supply.
Although fears over slab shortages have been alleviated in Europe, talk of the possibility of extra Chinese export duties is taming buying interest somewhat, traders note. But Russian material is still not in great demand, and is unlikely to gain traction any time soon, as the country’s military conduct in Ukraine is leading to tightening sanctions. This hints at more difficulties in receiving and paying for material.
A new, fifth round of EU sanctions banning Russian vessels from its ports is likely to cause further complications even for intercompany supplies of Russian material to Europe, traders say.
Russia is redirecting some of its slab volumes to Asia, with one large lot sale to China heard at an incredibly discounted $700/t cfr in the past week. This would net back to around $650/t fob Russian Far East, traders advise.
In the western hemisphere, slab offer indications have also softened, but sales have been sparse due to the absence of short-term availability and US producers’ adjusting expectations for third-quarter flat product pricing. Nearest Brazilian slab availability is for August loading.