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| Japanese Rail Export Talks On 2009 Shipments To USA |
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Japanese integrated steelmakers are expected to start their negotiations between the end of 2008 and early 2009 on deals of rail exports to the USA for shipments in March-May 2008 or for those in April-September 2009. The Japanese steelmakers used to take up rail exports to the USA under negotiated annual supply contracts with local rail road corporations. Since October this year, though, the Japanese steelmakers have held back on annual contracts in favor of half-year or three-month ones to meet violent economic fluctuations. There are forecasts that the Japanese steelmakers will negotiate less rail exports to the USA in 2009 than the level of 2008. For the main factor, it is understood that transaction prices of rails from local steel mills are way down. In the USA, electric steelmaker Rocky Mountain Steel Mills (RMSM) is leading sales prices of domestic rails. RMSM's price terms of rail supplies to major railroads are linked with ferrous scrap prices. With a nosedive in ferrous scrap prices since the summer of this year, RMSM's rail prices are believed to have fallen steeply until now. On the part of the Japanese steelmakers, they have no option but to study a price increase in the rail exports they negotiate anew to the USA, with an appreciating yen against the US dollar. Besides, chances are the Japanese steelmakers will face a tough environment for their rail exports to the USA, where the new federal government is expected to take a "Buy American" policy in an economic downturn. As things now stand, it is likely that the Japanese steelmakers will put prices before sales volumes and limit supplies to high-grade rails in their rail export negotiations with US railroads for shipments next year. As a result, there are forecasts that the Japanese steelmakers will opt out of some deals at the final stage due to pricing difficulties. Rail exports out of Japan to the USA totaled 170,000 tons in 2006 and 2007 when brisk rail demand arose in the USA due to a major increase in transports by railroad amid an enlarged distribution volume of commodities. In January-October 2008, Japanese rail exports to the USA stood at a total of nearly 147,000 tons, down 8.9% from the same period 2007. In this connection, the Japanese steelmakers took up rail exports to the world's resources-rich nations for development projects there while having reduced rail export volumes to the USA. |
| last modified : Fri 19 Dec, 2008 [09:59] |
