Merchant slab market activity remained relatively steady in the past week, with the main growth observed in the western hemisphere. It went in line with increases Brazilian producers have been implementing in the pig iron market, as well as ongoing US flat steel price growth and higher March-trading US scrap settlements, Kallanish notes.

With the end of the Carnival season came the series of sales, which filled Brazilian suppliers' order books up to June, at steadily rising prices. Having sold at $810-820/tonne fob to Mexico and the US around fortnight ago, and raised prices further, one producer achieved just under $850/t fob in a new sale of a large lot to the US. This depleted its availability further and prompted regional buyers to start looking eastwards for more slab.

Indeed, Chinese slab volumes are replacing Russian volumes lost to sanctions in the US and Europe. Chinese hot rolled coil is generally being offered at only $30-40/t above slab, which is now indicated at $640-650/t fob, while concessions can be negotiated for both products, sources say. These prices are offered everywhere – including the US, where Russian companies' mills are unable to bring their in-house produced material and are forced to buy in the merchant market. At $650/t fob and freight at $100/t, they still remain at an advantage over mills buying from Brazil, traders note.

Meanwhile, Asian suppliers are offering to Europe and Turkey, with some Asian mills replacing Russian supply and selling on a regular basis. Prices in Europe are circling $750/t cfr equivalent, and there is no shortage of material, while Turkey is getting offers at $710-730/t cfr. The only downside of Asian supply right now is lead times, but only when compared to relatively prompt Russian availability. The latter, however, is not much prompter for non-sanctioned material, and only a little for the sanctioned slab.

The price difference on an fob basis is around $60/t, in other words $600/t fob versus $640-670/t depending on destination. However, considering the sanctioned Russian slab is exported through the Baltic, and the mill is relatively close to the port, the ex-works cost is probably in equilibrium, sources note. Russian slab availability is quite restricted amid high internal requirements fuelled by strong domestic demand for finished products, and export demand for slab in Asia, Turkey and Europe.