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| NSC Offers $100 FOB Price Hike In Q4 Korean Deals For HR Coils |
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Nippon Steel Corp (NSC) offered a price increase of US$100/ton to US$1,100/ton FOB August 25 in its HR coil exports under negotiation with South Korea's major steel rerollers such as Hyundai Hysco for shipments in the October-December quarter. Behind the price increase on offer lies NSC's three-point perspective. First, high-grade HR coils from suppliers such as NSC and South Korea's Posco are in high demand amid signs of tight supply-demand conditions. By comparison, transaction prices of standard HR coils are trending downward. Second, assessment prices of high-grade HR coils will return to normal with a certain price increase in the October-December quarter as prices of low-grade HR coils are on the downside. Third, it would be better to phase up NSC's HR coil export prices for Asian destinations instead of raising them at once to a level to meet what prevails in the West. The current prices of HR coils stand at a high level of US$1,200/ton FOB both in Europe and the USA. As a result, NSC describes the price increase this time as an appropriate one, compared with a major price increase of US$250-300/ton in the past. At present, China's steelmakers are active in their deals of HR coil exports. In this connection, if a major price increase is executed in Japanese integrated steelmakers' HR coil exports to Asian destinations such as South Korea, it could bring more export sales of Chinese HR coils in Asia. The logic is seen as a factor for NSC's decision to limit the price increase to US$100/ton this time for South Korea. NSC is contemplating slashing supply volumes in its HR coil exports under negotiation with the Korean steel rerollers for October-December shipments. It is understood that the new contract volume with each Korean customer will be reduced to half the existing settlement due to blast furnace repairs at NSC's Oita works and the aftereffects of a coke oven accident at its Yawata works. Accordingly, it remains to be seen how the Korean steel rerollers will respond to the prospects of slashed HR coil supplies from NSC. In South Korea, Posco plans to execute mini mill repairs at its works from the October-December. During the repairs, Posco is expected to allocate HR coils from its integrated steel mills for domestic sales, which will result in the company's decreased domestic shipments of rerollable HR coils. It is considered difficult, though, for the Korean steel rerollers to cover decreased HR coil supplies from NSC and Posco with alternative imports of Chinese HR coils. Many of the Chinese HR coils are seen as unsuited for the material to put out such high-grade products as CR sheets and TMBP (the substrate for tinplate). Therefore, it is likely that the Korean steel rerollers will have no option but to reduce what they produce, according to market sources. |
| last modified : Fri 29 Aug, 2008 [10:50] |
