Japanese HRC suppliers remained not very interested in exports in July, but, due to the downtrend seen in major outlets, especially in the regional Asian market, and the strong competition for even limited sales, suppliers from Japan were forced to cut prices significantly. Nevertheless, new offers are expected to emerge by the end of August at higher levels.
Prices of ex-Japan SAE1006 HRC for the Asian region fell to $530-535/mt CFR in July, declining by another $15-20/mt from the levels of $545-555/mt CFR seen a month earlier. In late July, some tonnages of ex-Japan HRC were traded to Pakistan at $530/mt CFR by a major mill and at $533/mt CFR to Bangladesh. Some negotiations were even heard at $525/mt CFR and a few market sources said that small volumes could be traded at this level in very late July and early August. Initial offers in mid-July were at $540/mt CFR, but, with the very rapid downtrend in the Asian market, driven by India and Southeast Asia, Japanese exporters had no other option but also to follow the downward trend.
At the same time, Japanese suppliers avoided selling to Vietnam as Indonesian and Indian producers were very aggressive, providing $510-520/mt CFR in deals for large volumes in the second half of July.
“Domestic demand is stable amid a sluggish mood. Comparing NSC [Nippon Steel Company] and JFE, NSC has more room and JFE has less allocation since JFE plans some periodical maintenance for this fourth quarter,” a Japanese source said. Another trading source confirmed that Nippon Steel is expected to announce new prices soon with some increase possible. “They [NSC] also said the decline has stopped and they want to push up prices,” a Singapore-based source said, commenting on the tentative price improvement seen in Vietnam this week.
But price announcements from Japan for October shipment are expected closer to the end of August as Japan has an official national public holiday on August 11 and the major traditional Buddhist observance of Obon takes place on August 13-16, functioning as an unofficial nationwide summer holiday.
There have been no new bookings for ex-Japan HRC seen in the GCC due to logistical challenges. Some market sources agree that the tradable level for Japanese coils could be at $580-590/mt CFR, versus $600-610/mt CFR a month ago, but this price level is nominal due to the very volatile freight rates and the lack of interest from exporters.
Some limited bookings of ex-Japan HRC were reported by traders to Europe at €735-740/mt DDP in late July.
