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No Impact of Novel Coronavirus Seen on GO Demand at Present
The spread of novel coronavirus infection across the world has now caused a serious economic impact on the global economy. Steel products are no exception, but there have been no changes so far in the supply-demand balance of grain-oriented electrical steel (GO). Production in Japan is going well, and the export talks for the next quarter shipments are at final stages with higher quarter-on-quarter prices and order volumes.

Last year saw the GO users across the globe struggle with excessive inventory of transformers. This year, Japanese mills have raised their GO prices since January, in anticipation of the users replenishing their inventory.

At the end of last year, Chinese mills became passive about export of GO for some reason. In Europe, a GO mill withdrew from the market. Users showed no responses to these moves at that time. However, in March, some users accepted markup offers by Japanese mills, and some others made a comeback and placed orders after a long absence.

The infection is now rapidly spreading in Europe, but orders for GO are being placed as usual. Again, there have been no changes in the supply-demand balance of GO here, too. According to a source, the fact that GO is used for transformers and away from final users is behind this unchanged supply-demand balance. The accepted prices included a markup of as large as $70-80.

On the other hand, the future of non-oriented electrical steel sheet (NO) is unclear. In China, the use of inverter-driven compressors is now mandatory in all the domestically-produced air conditioners for energy saving purposes. This requires high-grade NO, and driving the demand in this area. China's Baosteel lowered its prices of flat products including hot-rolled coil for April shipments, but raised the prices of high-grade NO by 300 CNY ($43). Yet, the rapidly deteriorating economy will entail demand decreases in the automobile and EV sectors. Unlike GO, NO demand exists very close to consumers, which makes it inevitable that the demand will suffer the impact of the outbreak. No one can say anything clear about the extent at this point, though.
last modified : Thu 02 Apr, 2020 [13:25]
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