Negotiations on hot-rolled steel coils for the remote areas like Middle East and Central and South America will be commenced soon for shipment of late June/July. The Japanese mills are to endeavor to maintain an upward trend by realization of price increase even by one dollar.
It becomes usually the off demand season in late June through July when Ramadan starts (from around July 20) in Middle East, and the rainy season starts in Central and South America. In the same period last year, there were far fewer business negotiations under the unstable political climate on top of the above factors in Middle East, and due to less demand affected by the monetary turmoil or sluggish market in Europe or the USA in Central and South America.
However, in case of this year, even though there is an uncertain situation in France, Greece and so on, the government-led projects are moving in the Middle East area, and therefore, there is demand for hot coils. Accordingly, there is an opportunity of business, and the time when customers move on to purchasing steel products becomes the key.
As usually in this season, hot coil prices dropped, it is said that customers are already saying about price decrease. There is information that only some Russian mills seem to have offered those prices at $630 CFR. And, customers are saying that they intend to make negotiations with Korea, China and so on, and it is said that they are implying increase of their choices due to increment of the supply sources from the limited ones of Japan, Russia and so on, and are showing an attitude to keep a lookout for price increase.
Hot coils prices for the remote areas rose by USD 10 to 20 in March shipment, and in April, May and June shipments as well, those increased by USD 5 to 10 each. Although the range of price up is decreasing, the market prices become the level of USD 720 CFR. The environment is this. There are little factors to increase prices while there are no reasons to reduce prices. With this, the Japanese mills are going to maintain the current price level, to endeavor to raise their prices even by a small amount like USD 1 to 5, and to lead them to the next step.
As customers strengthen a wait-and-see-attitude, the market could lead to being collapsed if any cheap offer appears. The Japanese mills are observing that any mill would not move to secure quantity offering cheap prices under its severe profitability. However, there is information that a Russian mill made an offer at USD 630 CFR for Korea. The situation is subtle.
Source: The TEX Report