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| Fears Of Insufficient Japanese EG Sheet Supplies In Asian Export Deals |
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With tight supply-demand conditions for Japan's exports of electrolytic galvanized (EG) sheets, Japanese integrated steelmakers are hinting fears of insufficient supplies in their export deals of EG sheets with Japanese-affiliated and local consumer electronics manufacturers in Asian destinations, mainly in China. Some Japanese steelmakers have even begun to study whether to shift the allocation of crude steel production for EG sheets to other finished products. They argue that they have yet to conclude supply contracts of EG sheets with the Japanese-affiliated consumer electronics manufacturers for shipments in the January-March quarter. Behind the tight supply-demand situation for Japan's EG sheet exports lies a scarcity of continuous annealing capacity at the works of the Japanese steelmakers besides an upswing of demand for the CR sheets they provide. The current environment makes it difficult to execute sufficient production of EG sheets, with favorable demand for automotive CR sheets and tin mill products. Posco's EG sheet production South Korea's Posco plans to execute periodic repairs of the continuous annealing line for two months from March 1 at the company's Kwangyang works. As a result, EG sheet production from the Kwangyang works is forecast to decrease by 100,000 tons, which threatens to affect Posco's EG sheet exports to South Korean consumer electronics companies operating in China or elsewhere in Asia. China's EG sheet flow Local supply-demand conditions for EG sheets are fairly tight. Baosteel Co's domestic sales price of EG sheets for January shipments translates into a level of US$925/ton before tax. By comparison, the company's corresponding sales prices of hot-dip galvanized sheets for building materials and CR sheets translate into levels of US$790/ton and US$810/ton respectively. The company's sales prices of various steel products for February shipments have yet to become clear. But unconfirmed information circulating about a price increase of Yn200/ton (US$30) for products such as HR coils. As a matter of course, a price increase is considered sure to take effect for EG sheets as well. Japanese shift in crude steel allocation Among the Japanese integrated steelmakers, some of them have begun to study a shift in the allocation of crude steel for EG sheets in favor of other finished products concerning EG sheet exports to the Japanese-affiliated consumer electronics manufacturers in Asian destinations. In the background are prolonged contract negotiations on EG sheet exports to those Japanese-affiliated customers for January-March shipments. The trouble with the unsettled negotiations is that the price difference between what the Japanese steelmakers export and what Baosteel sells at home could widen to US$200/ton or more for February shipments unless the Japanese steelmakers settle the new price terms with the Japanese-affiliated consumer electronics manufacturers. In that event, Japanese EG sheet exports to China threaten to provoke local steelmakers into filing an antidumping case against imports of Japanese EG sheets. The Japanese steelmakers want to settle price increases of US$70-100/ton in their EG sheet exports under negotiation with the Japanese-affiliated consumer electronics manufacturers for January-March shipments this time. The Japanese steelmakers favor a break with the normal practice of concluding half-year supply contracts on the argument that what they pay for imports of essential raw materials such as iron ore and coking coal will go up from April onward. With the prolonged price talks on the EG sheet export deals this time, there are even forecasts that the Japanese steelmakers will feel tempted to stop what they provide for the Japanese-affiliated consumer electronics manufacturers until the two sides reach an agreement. |
| last modified : Tue 19 Jan, 2010 [10:09] |
