TEX reported that JFE Steel has firmly established a policy to increase its prices of hot rolled steel coils for March 2012 shipment by another USD 50 as it finalized negotiations on hot coils for January and February 2012 shipment with Turkey and realized USD 30 increase in such negotiations which was not fully satisfied but reached its minimal goal.
If this increase in price penetrates, it becomes USD 80 in total but its prices cannot be recovered to USD 750 CNF which was the level before dropping in price prior to the middle of September 2011. With this, JFE has a policy to make USD 750 CNF a starting price subsequently with effort to return to this level as earlier as possible.
JFE commenced in December 2011 its negotiations on hot coils for this quarter shipment offering increased prices of USD 30 to USD 50. However, its prices did not move until shipment of mid January 2012 but as they did not dropped, JFE reconfirmed bottoming out of them. After affirming the price rise tone from late January 2012, JFE has begun to increase its prices by USD 30 for the remote area.
Its price increase for Asia was slightly delayed but it concluded contracts with the USD 30 markup in total of USD 10 for late January 2012 shipment and USD 20 for February 2012 shipment. Its prices have not risen yet for Europe facing the financial turmoil and for India under the weak currency.
However, in USA, the market prices of hot coils rose as much as USD 40 and also since the beginning of January 2012, Nucor, ArcelorMittal USA and so on increased their prices of flat-rolled products by USD 50. Further price rise is expected. This can be said that prices of hot coils have entered a rising situation worldwide except for Europe and India.
Even since the beginning of the New Year, demand itself has not changed largely. Yet the factors of price rise seem that the situation comes for an user side to have to buy to some extent as its inventories are decreasing to the utmost limit due to continuation of its wait and see attitude, and also to have recognized for prices of hot coils to have dropped too much looking to begin withdrawal from export by the Korean and Chinese mills. At present, negotiations are by month but request from a customer is said to be increasing to change from February shipment to February and March 2012 shipment. It is because each customer seems to begin to have an anticipation of high prices.
In order to place a great deal of importance on the situation of eventual bottoming out, JFE is thinking to continue its negotiations reducing quantities by 10% to 20% from the current level. As the demand environment has not changed largely, it is to avoid large increase in price but to make an effort to keep the upward trend. JFE is seeing to be able to increase another USD 50 or so for March 2012 shipment for the time being.
(Sourced from TEX Report Limited)
