Japanese HRC exporters remained bullish during most of May, increasing prices further even despite dropping prices for ex-China HRC and lower tradable levels in Asia as a result. The allocation of HRC from Japan has remained limited, while overall demand for thin coils has stayed high, so exporters have focused on supply to higher-priced markets like the EU and Turkey or to affiliate companies outside Japan.
Offers of ex-Japan SAE1006 HRC to Asian and Middle Eastern customers reached $1,100-1,150/mt CFR in late May, up by $100/mt over the month. “Deals are mostly in the EU and Turkey, very few are in South Asia and ASEAN,” a major Japanese trader said.
“Now Japanese mills cannot make deals with new customers, since originally the allocation is squeezed due to strong demand in the automotive segment... Basically demand itself is strong everywhere, while steel output is not enough to satisfy everyone's needs,” another source said.
Limited sales to the Asian region have been confirmed from Japan at $1,100/mt CFR or slightly below, though most customers have been focusing on purchases of cheap position cargoes from China at far below $1,000/mt CFR.
In Turkey, the tradable level for ex-Japan SAE1006 HRC has been at $1,100/mt CFR and sales were done earlier in the middle of the month.
In Europe, the latest workable level for Japanese HRC was at €1,020-1,030/mt CFR, corresponding to $1,248-1,260/mt CFR.
Though the sentiment in May was good, most market participants are cautious as they believe that prices have almost reached a peak. “Currently, we need to keep our eyes on the future situation in India and Russia (instead of China), who enjoy a lot of selling at a high price to Europe in bullish sentiment. There might be some price collapse in the near future, since the market may need some price correction from a very high level,” a Japanese source said.