Japanese HRC exporters have had to lower prices in their latest sales, seeing a weakening of demand in the major sales destinations, the outbreak of Covid-19 in Southeast Asia, and persisting competition. But overall the decline has been small in the month-on-month comparison, as suppliers have still been facing limited allocations and firm local demand.
The deal price level for ex-Japan SAE1006 2 mm HRC for the Asian region has declined to $1,040-1,050/mt CFR for August-September shipment, down by $20/mt over the past month, according to SteelOrbis’ information, though lately there have been talks that more reasonable prices in the current weak demand conditions should be at $1,025/mt CFR or below.
Among the latest deals was a trade for 50,000 mt of ex-Japan SAE HRC to Pakistan at $1,045/mt CFR Karachi, for September and October shipment. A month ago in early July, the trades to this destination were at $1,050/mt CFR or slightly above. This means that just a slight negative correction of $5-10/mt month on month was seen for this destination. The highest level seen in a deal to Pakistan in the middle of July was at $1,060/mt CFR. “Japanese mills consider $1,000/mt FOB as a bottom mainly, and are also aiming higher due to tight allocation, while stable demand from the automotive sector also provides support,” a Japanese trader said. “Only Pakistan is buying from Japan [among Asian countries]. Demand in Southeast Asia is dead,” another source said.
In particular, the maximum tradable level for ex-Japan coils in Indonesia is $1,000/mt CFR, according to one of the major importers, but “now the market is very weak.” In Vietnam, no deals for ex-Japan or ex-S. Korea HRC have been heard as traders have been trying to collect bids at $1,010-1,020/mt CFR, but buyers have been unwilling to pay above $950-960/mt CFR for 2 mm coils.
The latest ex-Japan HRC offers to Europe have been reported at €990/mt CFR Italy or $1,175/mt CFR, slightly lower than €1,000/mt CFR in the middle of July. Demand in Europe has been poor due to seasonal factors and also customers have been able to get lower levels from other suppliers, including Turkey and even Vietnam at €930/mt CFR.
According to SteelOrbis’ information, in August Japanese HRC suppliers will be still cautious in lowering prices as allocation is not expected to increase much. “We are rather facing difficulties in getting allocation even for re-rollers and other main customers as well [as opposed to discussing prices], since the main Japanese mills tightened their output due to several issues, such as stopping some blast furnaces temporarily for repairs,” a source said.
Moreover, “Chinese mills are remaining silent at the moment. Buyers who usually purchase from China are now looking for other sources at the moment,” he added.