Billet Market Starts to Move Higher

We hear that spot billet premiums expressed over Midwest P1020 are starting to trade higher. This seems to be driven by several factors:

• Canadian producers are imposing a $0.025 cent per pound surcharge to cover the incremental duty on billet over Midwest that is not covered in the underlying Midwest duty paid ingot price
• The persistent discount of Midwest duty paid ingot versus full replacement cost is discouraging importers from supplying incremental supply to the U.S.
  • Midwest is now around $0.37 over LME, which is a good $0.08 below full replacement with the Section 232 duty applied
  • That means that expressed over LME, a prospective billet importer is earning $0.08 less; a $0.10-0.125 upcharge over current Midwest ingot is really over $0.02-0.045 of incremental value
• There may be some production excursions at Century involving homogenization