TEX reported that negotiations on hot rolled steel coils for Middle East, the Asian area and so on will start for September and October 2012 shipment from late July 2012 and attention is focused on whether price drop ends. In case of last year, those prices rose by about USD 30 for October 2012 shipment but nose dived for November 2012 shipment while they recovered from the beginning of this year to March 2012 and again dropped thereafter. As there seems to be no room to cut prices any more, no market nose dive is foreseen, and the market is expected to begin to recover gradually if the rock bottom prices appear.
At present, negotiations on hot coils have been undertaken for August shipment, and the result is starting to be seen, which is predicted to be settled at USD 620 CFR or so except the Russian mills' prices. The Russian mills are offering their prices at USD 580 CFR and seem to be able to afford to move toward securement of quantity by reducing their prices further by USD 30 to USD 50 considering the weak ruble and own raw materials for a blast furnace like iron ore.
However, the hot coil market continued to drop by USD 30 to USD 40 a week from the middle of June to late June 2012 but a price drop comes down to be narrowed to USD 5 to USD 10. In short, the mills of any other countries have not reacted against the Russian mills' prices, and they are in a state to cut unilaterally their prices. The market comes to a point where there are no buyers even if prices are reduced. When the Russian mills look over their shoulders, they are likely to find to have been tilting at windmills, and to feel that there would be no meaning to cut their prices any more.
If it is so, the present rock bottom prices may fall into USD 580 CFR and the Korean mills and so on are thought to end their negotiations at USD 610 to USD 620 CFR for August 2012 shipment. In each market, there is a possibility that both a mill and a customer are aware of bottoming out.
In November 2011, hot coil prices nose dived nearly by USD 100 to USD 620 CFR. This year as well, if prices will bottom out in September 2012 shipment, price declines may stop to the similar level of 2011 and subsequently, the market will develop to expect rebounding.
Source - TEX Report Limited
(www.steelguru.com)
