As the HRC export allocations of Japanese mills were still tight in August, most suppliers have been very selective in sales abroad, mostly ignoring the Asian market and focusing on the US and the EU.
Some price decline for ex-Japan coils has been seen over the past month, but overall the level is still high in comparison to other suppliers. Prices for ex-Japan SAE1006 2 mm HRC for the Asian region have been at $1,000-1,020/mt CFR in late August-early September, down by $30-40/mt over the past month, with no deals heard recently. “The price is still higher than for HRC of other origins, just because Japanese mills are not hungry,” a source said. The lowest level has been seen in Vietnam, where traders have been trying to collect bids for Japanese HRC at $970-980/mt CFR, but “mills are unlikely to sell at this level. They prefer to ignore the Asian market. It is ok for them just to sell in the high-priced markets like the EU and America,” a Japanese trader said.
Japanese exporters have been choosing to sell to Asia only if prices are attractive. In particular, a deal to Bangladesh was done at $1,080/mt CFR for September shipment in the first half of August. In Pakistan, after sales at $1,040-1,060/mt CFR earlier, no fresh deals have been done and buyers are waiting for new prices “definitely below $1,000/mt CFR,” according to a source.
Tradable price levels have slipped in Europe too - to $1,100/mt CFR maximum, sources have said, while in early August this level was $1,175/mt CFR on average. “Now the price is melting down, but the allocation [from Japan] is small, but it is ok,” a trader said.
The tight allocation for HRC from Japan has been amid stable and recovered demand in the domestic market - for automotive and construction use mainly, while also some maintenance works have been scheduled. In addition, JFE Steel stopped one of its blast furnaces in the west. “Basically, demand is exceeding supply in Japan,” one source stated, voicing a view widely shared in the market.
