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Japan settles wire rods prices for Asia for Dec shipment
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Monday, 19 Nov 2012

TEX reported that Japan's negotiations on steel wire rods of a blast furnace for Asia have almost ended for December 2012 shipment. Prices of BF wire rods were decreased in October and November 2012 same as other steel products, and those for December 2012 shipment were settled with no fluctuations from November shipment. As wire rod prices also bottomed out, the Japanese mills are fortifying their stance to ask for price increase in next quarter.

In negotiations for December 2012 shipment, price increase of USD 40 from the previous quarter by the Chinese mills is reported to have been accepted in the remote areas like Middle East. In the Southeast Asian area as well, they seem to be offering USD 10 to USD 20 markups which is expected to be penetrated into the market.

Against this, Korea's POSCO seems to have cut its prices for December shipment as well, and as a result, prices of about USD 50 are likely to have dropped during the quarter of October through December 2012.

Taiwan's CSC also decreased its domestic prices of wire rods by TWD 1,300 for December 2012 shipment. It reduced its prices to protect itself from imported products like Chinese ones.

Under the circumstances, the Japanese mills explained for their product prices to reach a limit of price down, and customers agreed on leveling off considering bottoming out of prices.

The Japanese mills struggled in price as well for China in this quarter. Japan's export quantity of wire rods to China in September 2012 was 6,600 tonnes, down 45.6% from the previous month, and also down 75.7% from the same month last year. Such trend is also expected to continue from October 2012 onward. Although production curtailment by the Japanese car manufacturers and so on largely contributed to this, it is reported to be also a big factor that the mills could not visit their customers and not proceed with negotiations. However, in case of steel tire cords, as there are many cases for tire cords other than the Japanese ones to cut, each time, production is suspended. Consequently, as productivity of such cords is too different from that of the Japanese ones, sooner or later, the Japanese products are foreseen to be reviewed again and inquires to them will be restored.

Export to Thailand and Indonesia covered decrease for China. The car production quantity of this year in Thailand is forecasted to increase by 50% from last year to 1,200,000 cars. That in Indonesia is also expected to increase by 20% ditto to 1,100,000 cars. Demand for BF wire rods is firm in both countries because of brisk car production. Such trend is expected to continue from January 2013 onward.

Export to Korea and Taiwan in this quarter is decreasing caused by inventory adjustment toward the fiscal year end. However, such adjustment is seen to end in December 2012 and inquires are expected to increase from next quarter. Under the circumstances, the Japanese mills are intending to raise their prices from next quarter even to lead price rise of other steel items. The markup range seems to be fixed in one to two weeks.

Source - TEX Report Limited


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