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January Imports Increase 80% From Year's low.

January import licenses rose 10.1% to 1,394,611 tonnes from preliminary December imports of 1,266,392 tonnes to the second highest level in the past 12 months. Nearly 85% of the increase in the month was due to a surge in slab imports, which rose 63% in tandem with a decline in flat-rolled tonnage, which fell 6%.

The combination is remarkable primarily because slab imports are running up in part due to lower sheet imports which are in turn driving sheet prices to year highs.

Chinese Tonnage Surges About 130% off the Bottom.

Chinese imports rose some 51% to 61,820 tonnes, the highest level since May 2009 led by a whopping 111% increase in flat-rolled. Russian licenses surged in January from 598 tonnes to 85,858 tonnes, and were nearly double the monthly average for 2009. Licenses from Australia rose some 150% to 60,972 tonnes, the highest level since October 2008.

Meaningful increases were also seen from Mexico -- up some 45% due primarily to a pickup in semi-finished -- and Korea, which was up 10.7% due to a jump in oil country tubular goods, or OCTG.

Brazilian imports dropped about 69% due primarily to surging demand in Brazil's home market where even

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stopped shipping to its captive U.S.-based rolling mill as demand and pricing in Brazil outpaced any other single region.

Tubular Imports Jump 22%.

OCTG import tonnage rose 52% to the highest level since last May, with Korea stepping in to replace China as the largest source of pipe imports. Line pipe and standard rails also posted meaningful increases, rising 12% and 72%, respectively, with standard rails at the highest level since July 2009. Wire rod and cold-rolled sheets each fell 23%, reverting closer to their monthly averages for 2009.


We believe relatively low domestic steel prices and the weak value of the dollar had kept imports in check in the second half of 2009. However, bare inventories and rising input costs have domestic prices on the rebound as of late while the U.S. is running to catch up to surging prices offshore. We expect rising domestic steel prices to raise the threat of imports for the near term.

Michelle Galanter Applebaum spent more than 20 years as a managing director at Salomon Brothers in New York and was the No. 1-rated steel analyst from 1988-2003, according to Institutional Investor magazine. In 2003, Ms. Applebaum formed Steel Market Intelligence, a 5-person Chicago-based equity research boutique providing advisory services to institutional investors. In addition to publishing 10-15 reports/week, Ms. Applebaum sponsors numerous CEO-level meetings for her investor clients during the year. She is regularly quoted on Bloomberg, Dow Jones, The New York Times and makes frequent appearances on CNBC and other news programs. Ms. Applebaum lives near Chicago with her husband, visiting children and 2 dogs.