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Negotiations on HR Coils for Remote Regions Start Soon for Jan Shipment
The Japanese mills' negotiations on hot-rolled (HR) steel coils for the remote regions such as the Middle East and Latin America are expected to start soon for January shipment. They postponed negotiations on HR coils for the remote regions slightly and are to commence such negotiations after seeing a rise in prices next quarter.

Chinese and Indian mills are already proceeding with negotiations for January shipment. Offers of Rizhao Steel of which blast furnace accident happened before are also found. Their prices are $560-565 FOB, which are raised by $5 or so from the previous quarter. They are likely to have focused on showing an upward price trend. Indian mills are active for the Middle East and Southeast Asia. Their offer prices are said to be $570 CFR. If the freight rate to neighboring Middle Eastern countries is assumed to be $10 or so, there is a case that their FOB prices are cheaper than those of Chinese mills. Indian mills lowered their prices for November shipment. Possibly they found that only Indian mills lowered their offer prices and have returned their offer prices by $30 or so this time.

India's export quantity of HR coils was 1.7 million tons in 2016, and Indian mills aim for export of more than 3 times higher than that in 2016 to 5.7 million tons. A Japanese mill source is observing that the reason why they expect an increase in quantity without reducing prices is because they predict no price fall in the market of HR coils. Russian mills are likely to be proceeding with negotiations for Turkey and Europe but nothing has been heard of them in other Middle Eastern region.

In the remote regions, a slight change can be seen. Chinese mills had led the market prices in the past several years. However, prices of Chinese products are not the lowest at present but are rather maintained at the high level. So, Chinese product prices have not been a benchmark for customers of each country. Chinese mills' offer prices are higher following Japanese ones, and furthermore their export quantity seems to be limited due to brisk domestic demand. Mills of each country are likely to be paying attention to cheap Indian products.

In China's market, prices of HR coils rose anticipating a rise in prices for shipments of December last year and January this year due to a price hike of raw materials despite a fall in demand, and inventories increased. In case of this year, inventories have not increased, and prices are stabilized. There is a high possibility for this pace to go on. Accordingly, in the export market as well, a stable price level is seen to be maintained.

The Japanese mills are in a position to be necessary to cut export quantity further for January shipment. It is because of strong domestic demand and malfunction of facilities. Under the situation, the Japanese mills will offer an increase in prices continuously. Compared to price levels of China and India, the Japanese mills are necessary to maintain prices at more than $600 CFR in order to keep a Japanese premium. As China withdrew from a role of a price-setting leader, an opportunity to lead the market may again come to the Japanese mills at high levels of prices.
last modified : Fri 24 Nov, 2017 [09:59]
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