It is the time when the Japanese mills' export negotiations on non oriented electrical steel sheets for China start for shipment of December 2011 and January 2012 but each mill absolutely does not show an attitude to move. It is because that price is falling up to the level that they will not cover even raw material costs, and on top of it, they will not be able to proceed with their export negotiations due to a wait and see attitude of each customer.
As for the Chinese mills' prices of NO electrical sheets for October to December 2011 quarter, Baoshan Iron and Steel decreased its price of high grade by CNY 400 and that of middle grade by CNY 550 while Wuhan Iron and Steel also did that of high grade by CNY 1,000 and that of middle grade by CNY 200 and Anshan Iron and Steel as well did mainly that of low grade by CNY 650.
In dollar amount converted, Baosteel keeps the level of USD 800 CNF ex Japan basis but the market price is falling to the level of USD 720. If the Japanese mills are going to enter into negotiations, the situation becomes for them to offer the level of USD 600 FOB.
As far as its price is this level, it will never cover the raw material costs. Therefore, it is the situation that any mill does not make an offer. The industry begins to see possibly Baosteel and WISCO are also not proceeding with business negotiations.
At present, in China, active mills are the new emerging ones like Shougang Group and Xinyu Iron and Steel which have participated newly in the market. Their facilities have just gone on stream. With this, those mills are devoting their efforts to produce and sell their products by all means. As it is now before the Chinese New Year, and is in the less demand season, movements of products are decreasing. For this reason, it is said that distributors have enough inventories of NO electrical sheets, and are making realization sale of them. Under such circumstances, in order to sell out certain quantity, they have to decrease their prices. Even in case of unprofitable deal, the new emerging mills seem to have been taking actions.
It is the problem when such dumped sale by the emerging forces and distributors will be ceased. Even if such dumping is ceased, the Japanese mills will not be able to proceed with negotiations at the current price level. Attention is drawn to see whether such environment continues so long or mainly the major mills undertake normalization in price after the Chinese New Year of next year.
Meantime, both demand and price of grain oriented electrical steel sheets to high grade are normal. Against this, as for CGO (conventional grain-oriented) electrical steel sheets, as Baosteel stepped up its production (capacity 300,000 tonnes installed in September 2011), the company is competing severely with WISCO (the new mill with capacity of 300 thousand tons started operation last year), and consequently, its price structure is slumped. The Japanese mills are showing a wait and see attitude in this field as well.
(Sourced from TEX Report Limited)
