In late-June – early-July international slab market was under impact of to diverse trends. From one side increase of contracted prices for iron ore and coking coal in the third quarter furthered cost increase. In spite of fall of spot prices for ore by merely 20% in comparison with the contracted ones by mid-June the majority of Asian steelmaking companies made quarterly agreements with raw materials’ suppliers to guaranty regular raw material supplies for themselves. By Taiwanese companies assessments average cost for production of one ton of slab grew to about $ 560 per ton in July.
From other side price rise for semis was prevented by weakness of flat steel products market. With this in early-July there was a price fall in those markets where prices were quite strong during entire second quarter – in Europe and US. East Asian market was also under pressure in consequence of excess quantities of Chinese and Japanese export in May-June. Yet Asian steelmakers haven’t reached common opinion on the closest perspectives. So, Korean companies have lifted local prices for their products in the beginning of July, while Taiwanese company China Steel the other way decreased quotations for August-September. Whether or no, a lot of rolling mills in the region carry out careful policy, holding off large purchases of semi finished products.
As a result the price level for slabs at Far East for Q3 turned to be compromise. Suppliers have not succeeded to increase quotations by $40-50/t compared to April-June as they aimed to even in June, but there was no fall in this market as well. Sufficient abatements were forced to be done only by Brazilian companies who hoped to jack up prices to $ 640-650 per ton CFR. Actually prices remained on the same level as in Q2 - $ 600-610 per ton CFR. Russian and Ukrainian exporters meanwhile even got a little winning, having put their prices at $ 560-580 per ton CFR level as during recent three months it was $5-15/t cheaper. However, this result have been got quite in expense of restricting supply of semi finished products.
Ilyich Steel has had to drop its slab quotations for Middle East and South Korean markets to around $460 per ton FOB. Other CIS producers offer this product for $470-500 per ton FOB. It is not ruled out that cost of slabs at the spot market in the second half of the summer may drop to $ 450 per ton FOB and lower.
Further dynamics in the international slab market in the coming months will totally depend on situation with hot rolled coils and heavy plate. The majority of experts predict slow move down till the end of summer and recover in September-October. But the crucial role here will play situation with developed economies. Now it gives few reasons for optimism and by early autumn it is not likely to improve essentially.