Foreign Steel Import Licenses Trending Below 2 Million Net Tons

Imports of finished steels, such as hot rolled, cold rolled and galvanized, continue to be lower than year-ago levels.

Hot rolled is trending toward a 130,000-net-ton month. One year ago, HRC imports were 244,444 net tons.

Cold rolled is trending toward a 125,000-net-ton month. One year ago, CR imports were 165,849 net tons.

Galvanized imports are trending toward a 209,000-net-ton month. One year ago, GI imports totaled 256,590 net tons.

Galvalume, which is a much smaller product category, is trending toward a 68,400-net-ton month. One year ago, AZ (other metallic) imports totaled 95,591 net tons.

Semi-Finished Steel Imports High as New Quarter Opens Up Quotas

Brazil is the largest exporter of slabs (semi-finished steels) to the United States. The Brazilian slabs are destined for multiple mills such as California Steel Industries, ArcelorMittal Nippon Sumitomo (AMNS) in Calvert, Ala., NLMK USA, as well as others. The Brazilian mills have been shipping 30 percent of their annual quota during the first two quarters and it appears this will be the case for the third quarter (existing quarter). Much of the quota material was being held in bonded warehouses and was released during the first two weeks of July. During these two weeks, Brazil slabs totaled 1,218,575 net tons. According to one of our Latin American steel sources, Brazil will only have 10 percent of the quota remaining for the fourth quarter of 2019. We were told this would be approximately 350,000 metric tons (386,000 net tons).

The next two largest slab exporting countries are Mexico and Canada. It is expected that each of these countries will increase the tonnage of slabs being sent into the United States. Mexican license requests so far this month are sparse at 17,600 net tons. During the month of June, their license requests totaled 164,600 net tons. Canada, prior to the relief from the Section 232 tariffs, was an insignificant player. Most months this year, Canada accounted for less than 5,000 net tons of semi’s imported into the U.S. During the month of June, that number shot up to 64,500 net tons. So far this month, Canada has requested 20,500 net tons of semi import licenses.

So far this month, Russia has not yet requested any import licenses for semi-finished steels. Last year, Russia was averaging 150,000 net tons per month (or more). This has dropped during calendar year 2019 as selling prices of benchmark hot rolled have collapsed, thus decreasing the spread between the Russian slabs and domestic HRC prices. During the month of June, Russia requested 98,600 net tons of semi-finished licenses.

SMU expects Mexican and Canadian mills to pick up some of the slack that will be left as Brazil deals with their quota issues in the fourth quarter. However, for third-quarter 2019, we anticipate a slide in imports of semi’s similar to one year ago.