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| HOME >> Topics List >> October, 2008 >> 27 (Mon) |
| Difficult Japanese HR Coil Exports To ROK For Q4 Shipments |
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Japanese integrated steelmakers face growing difficulties in executing actual HR coil exports to South Korea under the existing supply contracts for shipments in the October-December quarter. There are marked cases of delayed L/C openings for October shipments. Besides, local customers have yet to present the Japanese steelmakers with assorted orders to meet what they will produce in November. As a result, there is a possibility that the Japanese steelmakers will give up part or some of October-November shipments. Also, it is likely that what the Japanese steelmakers provide for the Korean customers will further decrease under the existing contracts for Q4 shipments. Some of the Japanese steelmakers are said to have held down their Q4 supply volumes to a quarter of what they usually take up. A depreciation of the Korean won to the US dollar once halted. On last weekend, though, the depreciation advanced to W1,410-US$1.00. As a result, there are moves to reject L/C openings among South Korea's major banks, combined with a shortage of US dollars. The Japanese steelmakers and South Korea's various HR coil users have long business relations and a close relationship of mutual trust. Until now, no problem has arisen between the two sides even if South Korea's major banks assume no L/C openings right before each shipment of HR coils from Japan. The present situation, though, makes it difficult to follow the usual practice, an environment in which the Japanese steelmakers need to hold back on what they produce until L/C openings take shape. It is understood that many of South Korea's small and midsize customers are involved in delayed L/C openings on HR coil imports from Japan for October shipments. Still, even among major customers, cases of no assorted order have begun to arise for what the Japanese steelmakers will produce in November. Besides a scarcity of US dollars in South Korea, local steel rerollers face tough market conditions for exports of what they put out with imported HR coils from Japan. The going export markets are less than US$1,000/ton FOB each for hot-dip galvanize sheets, electrical sheets, and TMBP (the substrate for tinplate). Under the existing circumstances, the Korean steel rerollers stay away from placing assorted HR coil orders with the Japanese steelmakers under the existing supply contracts for Q4 shipments. Meanwhile, there are signs that South Korea's various HR coil users have refused L/C openings for HR coil imports from Chinese steelmakers under the existing supply contracts. The Chinese steelmakers' initial export prices of HR coils for South Korea were said to have stood at a level of US$900-950/ton FOB for Q4 shipments. It is understood that the Chinese steelmakers are perplexed at the Korean refusal of L/C openings because they started HR coil production for South Korea before the L/C openings. The Korean users are said to have requested the Chinese steelmakers to supply HR coils at prices that compare with what applies to domestic sales in China on the argument that China's domestic HR coil market is on the downside. The Korean users' price requirements are described as around US$800/ton FOB for October-November shipments and around US$700/ton FOB for December shipments. The Korean users are quoted as saying that they will reject L/C openings unless their price requirements are met. In this connection, South Korean buyers have begun to seek a similar price reduction in negotiated imports of heavy plates from China in the knowledge that China's domestic prices of heavy plates are trending downward, according to market sources. |
| last modified : Thu 30 Oct, 2008 [10:33] |
