Initial impacts of slab shortage on Asian market

Initial impacts of slab shortage on Asian market

Yieh Loong, the Taiwanese flat rolled products mill, has been facing difficulties since late November during its negotiations with slab producers and international trading houses to secure their slab requirement for the first quarter of 2003. So far, the mill has been able to conclude purchase of about 40'000 mt ex-NLMK (Novolipetsk) mill of Russia through an international trader, reportedly Balli, to be shipped in February 2003. Conract price is reported as $231/mt CFR FO Taiwanese port. The problem is mainly caused by the strong demand in China and the shortage of slab supplies by local Chinese mills. One of the major suppliers, Wuhan Steel is going to have a shortage of over 250'000 mt of slabs according to market reports. Market sources say; Wuhan Steel will only be able to supply less than 100'000 mt to Yieh Loong during the first quarter. This will force Yieh Loong to find other sources to procure slabs. SteelOrbis heard that a Yieh Loong delegation had visited Wuhan during first half of December. It is understood that the Taiwanese delegation discussed potential hot rolled coil supply to Wuhan from Yieh Loong. It is obvious that the strong demand to downstream products in China, will also keep the demand of hot rolled coils and slabs very firm. As reported by SteelOrbis earlier this month, the Japanese mills have been planning to keep their sales price of slabs at the same level with the fourth quarter of 2002 ($235/mt CFR FO), but reduce the quantity to be delivered to the Taiwanese mill. According to reports, Yieh Loong could only secure 120'000 mt ex-Japanese mills so far.