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February preliminary steel imports rose a surprising 5.6% to 2.69 million tons (mt) from 2.55 mt in January, mainly due to an unexpected surge of imported semi-finished steel from Brazil, which we estimate increased nearly 80%.  Finished steel imports actually dropped 0.4% in the month, while semi-finished as a total rose 31.1%.  We generally compare preliminary monthly data to prior month preliminary data – however, in January there was an unusually meaningful +10.5% revision that will likely leave final February imports down sequentially.

Brazilian semis are running up nearly 45% over the past eight months compared to 1H 2011 and we believe most of the tonnage is headed to Thyssen’s Alabama rolling mill. The average run-rate for the last three months is some 295,000 tons per month, or around 75% of the mill’s ultimate rolling capacity.

Meaningful import increases were also seen for wire rod (up 100.1%) and sheet (up 9.5%).  The largest decrease on a tonnage basis was for line pipe, which fell 28.2%, while declines were also seen for heavy structural shapes (down 30.4%), cut-to-length plate (down 16.5%), rebar (down 9.1%) and OCTG (down 5.8%).

Our full report is available to subscribers and provides further thoughts on February imports as well as our outlook for the coming months and implications for steel equities.

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