TEX reported that the market of hot rolled steel coils which at one time showed an indication to be directed to the second bottom is stabilizing from the latter half of the previous week to this week, and its concerns about breaking the bottom disappeared.
According to a conversation between the seller and the buyer on the market, prices are around USD 610 to USD 630 CFR based on which there are no contracts reached yet but a feeling of anxiety for prices to dip below USD 600 CFR begins to disappear.
The market prices in late June 2012 collapsed rapidly to USD 600 CFR from the previous price level of USD 650 CFR, and further, dropped to USD 580 CFR. Export prices of hot coils to Middle East from Asia became even USD 550 FOB. The factor of plummet is seen to be Russian offer prices.
One of the reasons to revise such situation is price hike of raw materials for a blast furnace, and further as information about deficit operation of the Chinese steel mills spread, an observation that there will be no further price down is said to be recognized. From the buyer's point of view, even if it buys at USD 600 CFR, there is a concern that such buyer would have bought at a higher price a week later and therefore, the buyer could not conclude a contract but such anxiety is seen to ease.
At present, such anxiety seems to be fading out, and although the Russian mills' cheap offer prices have still been left, immoderate request for cheap prices is said not to be found. Panicking seems to stop. There is another view that such information as hot coil prices of Baoshan Iron & Steel for August 2012 shipment is revealed within a couple of days with no fluctuation from July 2012 is spread, it has made the customer's anxiety cool down.
In case of Korea, as both domestic and overseas markets of hot coils are stabilized, negotiations on hot coils for shipment of July August or July through September are said to have been finalized from the previous week to this week. At present, prices for a small and medium sized customer were KRW 750,000 (decreased by KRW 50,000) and those for a major customer were raised nominally by KRW 5,000 to KRW 10,000 on ex factory basis. At exchange rate of USD 1 to KRW 1,140, prices for a small and medium customer are seen to be about USD 658 while as those for a major customer are said to have become nominal by adjusting inland freight ex factory, if such adjustment is offset, prices seem to have remained virtually unchanged. Those prices seem to be around KRW 700,000 or equivalent to USD 614. As the won is fluctuating, conversion into the dollar is not accurate, and therefore, the environment is easily to causes the trade dispute.
Seen from prices for a major customer, the Japanese mills are not to be needed to cut their prices of hot coils for Korea for August 2012 shipment. However, a customer's stance to require price down below USD 600 CFR has not changed since the past.
A present issue in negotiations on hot coils for Korea is quantity. POSCO and Hyundai Steel have almost not appeared in the export market. It seems to be because sale for the domestic market is more gainful than that for export. As a result, there is a possibility that such effects are to be passed on to Japan's export quantity of hot coils for Korea.
Source - TEX Report Limited
(www.steelguru.com)
