Japanese HRC exporters managed to avoid decreasing their prices in September below $1,000/mt CFR, unlike some other suppliers in the global market, even though overall allocation has started to increase due to lower consumption from the local auto industry.
Prices for ex-Japan SAE1006 2 mm HRC for the Asian region were hovering at around $1,000/mt CFR in September, just slightly below $1,000-1,020/mt CFR seen a month earlier. Negotiations at $20/mt higher and lower than this level were seen over the month.
A sizable lot of HRC from Japan was sold at $1,000/mt CFR to Bangladesh. Also, offers to Pakistan were not slipping below $1,000-1,020/mt CFR during the month. Comparing these prices with the levels seen in early August, they are down by $40-60/mt. But the decrease was almost absent in September. “Suppliers cut prices in [late] August, but prices are still at $1,000/mt CFR till now,” a Japanese-based source said.
As a result, there were no deals from Japan to Vietnam over the past month in the spot market, as the tradable level to this destination was hardly above $920-940/mt CFR.
“Allocation has started to come back recently, due to low demand at this moment from the automotive segment, driven by the shortage of semiconductors,” a Japanese trader said. “But I guess this chance would be for a very short period, since export allocation shall be reduced once automotive demand comes back,” he added. Two major Japanese auto producers Toyota Motors and Honda announced cuts in their production plans for October by 30-40 percent due to the chip shortage.
Though overall allocation posted some increase recently, as the capacity cuts are still in process in Japan, overall volumes available for the export market are not so big as to put pressure on prices, sources believe.