Seeking Alpha
Profile| Send Message|
( followers)  

December Imports Nearly Unchanged. December import licenses rose a nominal 0.4% to 1,202,997 tonnes from preliminary November imports of 1,198,282 tonnes. This follows an 11% drop in November after four consecutive monthly increases. We believe slow seasonal activity coupled with December’s remarkably low domestic steel prices relative to the rest of the world are keeping the lid on imports.

Licenses from Russia and The Netherlands Plummet. Russian licenses were almost nonexistent in the month, falling 99% to 597 tonnes in December from preliminary November imports of 81,780, reversing the two-month surge from semi-finished steel. Licenses from the Netherlands declined 73% to 14,732 tonnes, due to significant declines in hot-rolled sheet and tin plate. Import licenses from India more than tripled, coming in at 52,364 tonnes. Sizeable increases in import licenses also came from Mexico (up 26%) and Turkey , which rose to 25,389 tonnes following only 748 tonnes in November due primarily to a jump in wire rod.

Chinese Tons Fall as the November Surge in Line Pipe Abates. Chinese import tonnage licenses for December fell 27% to 40,259 tonnes after rising for four consecutive months. The drop was entirely due to an 82% decline in line pipe, which had surged more than three-fold to 25,503 tonnes in November before falling to 4,587 tonnes. Meanwhile imports for the vast majority of Chinese products actually rose slightly in December.

Changes by Product Largely Isolated by Region. Import licenses of semi-finished steel plunged 43% in December to 183,448 tonnes while hot-rolled sheet fell 31% to 52,864 tonnes. OCTG imports rose 88% as surging imports from Korea and Canada began to fill the vacuum left by Chinese product and wire rod licenses increased 58%.

Outlook. We believe relatively low domestic steel prices and the weak value of the dollar have kept imports in check for the last two months. However, bare inventories and rising input costs have domestic prices on the rebound as of late while the US is running to catch up to surging prices offshore. December import licenses were quite low, 45% below the 2009 high of two million tonnes in January. If domestic steel prices continue to rise, and we expect they will, imports could bottom out and start heading back up.

Disclosure: NA

Source: December Steel Import Licenses Stay Flat After Falling in November