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Asian Stainless Steel Market Conditions Marking Time
Stainless steel market conditions in Asia are caught in a continued wait-and-see sentiment on the whole. For nickel-based stainless CR sheets, the current bids are US$3,200/ton C&F for products from Japan and US$3,100/ton for ones from South Korea and Taiwan. Japan's stainless steel manufacturers, though, favor holding back on offers because they believe that what they need is a price level of US$3,400/ton C&F or beyond. For chromium-based stainless CR sheets, the going asking prices are US$1,800-1,900/ton C&F for products from South Korea and US$1,900-2,000/ton C&F for ones from Taiwan and Japan.

LME nickel prices stood at a level of US$12/lb in late April and came down to that of US$10/lb in early May. They have fallen off to a level of US$9/lb since mid-May. As a result, Taiwan's stainless steel producers first reacted with a domestic price reduction of NT$10,500/ton (US$318) for Ni-based CR sheets. Then, South Korea's Posco priced down its Ni-based CR sheets by W200,000/ton (US$166) in domestic sales. In China, too, Taiyuan Iron & Steel Group Co executed a domestic price reduction of Ni-based CR sheets by a cumulative Yn2,500/ton (US$368).

With the domestic price reductions in the three East Asian nations, the Asian stainless steel market for export deals declined by nearly US$300/MT at a stroke after an active market on track to a price level of US$3,600/ton C&F for Ni-based CR sheets. At the time, Japan's stainless steel manufactures expected LME nickel prices to stop falling at around US$10/lb, leading to a price downturn of US$200/ton for Ni-based stainless CR sheets in Asia. LME nickel prices, though, have receded to below US$10/lb. As a result, Asian prices of Ni-based stainless CR sheets are under pressure for a decline of US$300/ton or more.

The Japanese stainless steel producers believe that the Asian stainless steel export market for Ni-based CR sheets will rebound to US$3,400/ton C&F or beyond once the LME nickel market has recovered to a level of US$10/lb. For the main reason, they point out that a weak tone of Asian stainless steel prices is limited to China's domestic market.

China's stainless steel mills are thought to have operated at capacity for production of Ni-based CR sheets in April. But local stainless steel stocks in Ni-based CR sheets increased considerably as domestic customers had taken a wait-and-see stance altogether, which is believed to have brought a fall in the domestic stainless steel market. In the Wuxi area, distribution stocks of Ni- and Cr-based stainless sheets increased by nearly 20,000 tons to a total of 248,000 tons in late May from that of 230,000 tons in late April. There is a possibility that China's major stainless steel manufacturers will opt to reduce what they put out if the distribution stocks further increase in the Wuxi area.

China's annual Guangzhou trade fair serves as an advance indicator of the nation's stainless steel production. What matters is negotiated export deals of stainless steel utensils at the Guangzhou fair for shipments to the USA. This year, though, the Guangzhou trade fair took place in April, one month ahead of the normal opening, because of the Shanghai Expo. As a result, the results of the Guangzhou proved less of a judgment material, leading to increased production at various stainless steel mills.

In the West, meanwhile, the USA's domestic stainless steel market is in good condition. The asking price stands at US$4,300/ton for June shipments. There is no doubt that what US stainless steel producers quote will stand at a level of US$4,000/ton for July shipments even if the nickel surcharge goes up. In Europe, a price increase of 60 euros/ton is in effect for stainless steel products, which indicates a favorable market situation that permits a price increase even after a fall in LME nickel prices. Still, there are signs of a wait-and-see sentiment emerging among local customers for stainless steel products.
last modified : Wed 09 Jun, 2010 [10:16]
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