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Brazil's slab export tags widen downward on 232 uncertainty

Apr 27, 2018 | 03:20 PM | São Paulo | Felipe Peroni

Export prices for Brazilian steel slab widened downward this week with prices in the United States market differing from those in other buying destinations because of negotiations for exemptions to the Section 232 import tariffs.

Metal Bulletin’s weekly assessment of Brazil’s slab export prices fell to $560-600 per tonne fob on Friday April 27 from $600-610 per tonne fob a week before.

Late last week, Brazilian producers active in the market were insisting on offers higher than $610 per tonne fob, with a focus on the US market.

But buyers in the US were not willing to pay such prices and, early in the week, rumors about reduced offers from Brazil were spreading in the market.

After that, buying interest decreased to around $560 per tonne fob, with rumors about bids at even lower prices.

Most Brazilian firms withdrew their offers from the export market to wait for a clearer picture to emerge before resuming negotiations.

“Companies will not sell at any cost,” a source said.

“It is impossible to launch offers with this continuing uncertainty,” another source said.

The slab market became even more complex when it became known late on Thursday that the US has offered a quota agreement for steel products exported by Brazil, based on average volumes shipped in the past three years.

If Brazil accepts the offer, the export volume limit for semifinished steel products, including billet and slab, will be 100% of the average over the past three years. This would amount to around 3.5 million tonnes per year.

Market participants believe that, if a deal is reached on a Section 232 exemption, producers would not accept bids of less than $600 per tonne fob from US buyers.

“The quota will create two different prices - one to the US market and another one to the rest of the world,” a source said.

In other regions, such as Turkey and India, prices would need to be at a maximum $560 per tonne fob to result in there being no bookings. In Southeast Asia, slab prices were $570-585 per tonne cfr.

“At $560 per tonne fob, a deal [for billet] might be viable to clients in Asia,” a source said.