International Steel Prices
CRU: Falling steel prices limit demand for imports into US
Written by Brett Reed & Diego Giangreco
May 17, 2024
The recent decline in US hot-rolled (HR) coil and longs prices has further restricted demand for imported material. Despite the decline in US sheet prices, CR coil and HDG imports remain attractive. While demand for imports of longs products has been limited, buyers have increased imports of wire products to avoid wire rods’ higher tariffs.
HR coil import demand softens as prices decline
The recent downward pressure on US domestic sheet prices has restricted demand for HR coil imports. Domestic demand appears to be weakening across the board, and the end of outages in April, alongside the resolution of some recent unplanned outages, means that supply has outpaced demand. Domestic lead times are also falling, making domestic offers more attractive in the near term. As US sheet prices trend lower, market participants have reported a withdrawal in import offers into the US for some products. Additionally, these withdrawals in import offers may also be due to higher prices and increased demand in other regions.
Despite lower sheet prices, CR coil and HDG imports remain attractive. In fact, the spread between US and Germany CR coil prices remains elevated at $418 per metric ton (mt). CR coil and HDG imports may also be used as a physical hedge for some buyers against potential production issues that may occur again later this year.
Demand for longs imports was also limited as longs prices remained under pressure in May. Residential construction activity started to bounce back, but non-residential is still under pressure given stubborn inflation rates and tighter lending practices. However, market participants report that imports of wire products have increased as buyers look to avoid wire rods’ higher tariffs.
New Brazilian quotas system on steel imports
Brazil’s Foreign Trade Chamber (Camex) has approved quotas on imports of 11 steel products, including HR coil, CR coil, HDG sheet, and wire rod. The quotas are 30% higher than the products’ average import volumes between 2020 and 2022. After the quotas are filled, the import duty on these products will increase to 25%. The changes are expected to take effect in the coming weeks, subject to review by the country’s Mercosur trading partners. If accepted, the new quotas system will last for 12 months.
Brazilian slab export prices maintained a downward trend
Brazilian slab prices decreased again m/m by 2.38% from $630/mt to $615/mt FOB Brazil for June shipments, as prices remained subdued in the US, Brazil’s main export destination. In terms of trade, there was a shipment, with the main export market being, as usual, North America, accounting for 82% of the volume, while the second destination was Europe, receiving the remaining shipments.
Brett Reed
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