Most major Japanese mills have provided just a limited hot rolled coil (HRC) allocation for the spot export market in March as they have been enjoying good local demand and their production has been reduced. Moreover, transportation issues and overall bullish trends in Asia, Europe and the Middle East have pushed ex-Japan HRC prices up significantly.
Most latest offers for ex-Japan SAE1006 HRC of 2 mm maximum have been reported at above $900/mt CFR to different outlets in late March. In late February, prices for Japanese coils were at $800-830/mt CFR in deals to different sales destinations - in Southeast Asia, Turkey and Europe.
For instance, offers to Indonesia and Thailand have been heard at $900-910/mt CFR recently. One of the main Japanese mills has been offering to Pakistan at $920/mt CFR for June shipment. Among Asian countries, despite the recent increase, the tradable level for import HRC in Vietnam is still among the lowest - at $830-835/mt CFR maximum for thin ex-Japan or ex-S. Korea HRC. But no offers at such levels have been heard from any Japanese exporters over the past week. In the first half of the month, there were some offers from Japan for May shipment at $850/mt CFR to Vietnam, but they have disappeared by the end of the month. With the hike in freight rates and problems with finding vessels, most exporters preferred to ship to their subsidiaries, sell in the local market or to provide limited volumes to regular customers and high-priced markets. “We decline many enquiries due to the allocation problem,” a Japanese source said.
The workable price level for Japanese HRC suppliers has increased to $940-945/mt CFR in Europe, versus $830/mt CFR a month ago. Only limited regular volumes have been sold in March due to a big hike in freight rates and transportation issues.
“Demand itself [in Japan] is strong after the recovery from Covid-19 for the automotive and yellow goods sectors. Moreover, the mills are very tight in supply, facing material shortage here and there,” a source said.