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|Semiannual Contract To Predominate In Japanese HR Coil Exports To ROK|
A semiannual supply contract looks set to take precedence of a quarterly deal in HR coil exports out of Japan to South Korea for shipments in and after April 2007, according to market sources. Japanese integrated steelmakers virtually finished their HR coil export negotiations by last weekend on new supplies to South Korea's various steel rerollers.|
Among the Japanese steelmakers, Nippon Steel Corp is in agreement with Hyundai Hysco on a price increase of US$20/ton and a contract period of six months covering April-September 2007. As a result, it follows that the two companies are on track to a semiannual settlement both in quantity and price. Indications are that Sumitomo Metal Industries Ltd and Kobe Steel Ltd will negotiate the identical contract terms with Hyundai Hysco.
Meanwhile, JFE Steel Corp is contemplating concluding separate quarterly supply contracts March 26 with Hyundai Hysco and other Korean steel rerolllers for April-June shipments, which indicates JFE Steel's position to maintain what the company has done until now.
Japanese HR coil prices for export
Japanese export prices of HR coils for South Korea have fluctuated violently in the past 2-3 years. They used to go up or down by a unit of US$100/ton to the confusion of both the Japanese integrated steelmakers and the Korean steel rerollers. It was China's HR coil export prices that brought the ups and downs of Japanese HR coil prices for South Korea. Chinese steelmakers exported HR coils to South Korea when a surplus arose in domestic HR coil supplies in China. They pressed hard for a major price increase in their HR coil exports to South Korea when supply-demand conditions for HR coils tightened up in East Asia.
At present, though, low-priced HR coil exports by China's integrated steelmakers are trending downward as downstream processes (for products such as CR sheets and coated sheets) are up and running at their works. They executed HR coil exports at low prices until they brought the downstream processes on stream.
Korean steel rerollers
South Korea's various steel rerollers usually depend on CR sheet production as the mainstay of their operations. But they face uncertain prospects of their operations at all times because they find it difficult to get adequate price increases for the CR sheets they sell. As a result, they are shifting the weight of their production these days from CR sheets and hot-dip galvanized (HDG) sheets for building materials to high-grade products such as automotive HDG sheets and Galvalume (galvannealed) sheets. The production shift indicates a focus on where Chinese steelmakers are still weak.
Under the existing circumstances, the Korean steel rerollers have no option but to take HR coils of good quality from the Japanese integrated steelmakers and South Korean integrated steelmaker Posco while holding back on purchases of low-quality HR coils from China. Besides, the Korean steel rerollers need stable prices for imported HR coils from Japan.
For the Japanese integrated steelmakers, the HR coil price agreed at US$520/ton FOB between Nippon Steel and Hyundai Hysco is by no means a low price. It will become possible to check an increase in Chinese HR coil exports to South Korea if Japanese HR coil exports there fetch a stable price level of US$520/ton FOB. With rising raw materials costs for China's integrated steelmakers, a downtrend of Chinese HR coil exports to South Korea could contribute to the Chinese government's policy for a shakeout of small and midsize integrated steel mills at home.
Accordingly, most of the Korean steel rerollers have taken the plunge and agreed to conclude a half-year supply contract each this time for HR coil imports from Japan after their understanding of the Japanese steelmakers' desire to build a stable price level in their HR coil exports to South Korea.
|last modified : Thu 29 Mar, 2007 [11:00]|