TEX reported that negotiations on base metals for making galvanized iron sheets for the remote area like Central and South America are expected to start soon for March 2012 shipment. The Japanese mills seem to offer a markup of USD 80 and aim to recover the level of USD 830 to USD 850 CNF as it is the demand season.
Demand on base metals for GI sheets usually surges from February and March 2012 shipment after the Chinese New Year, and reaches its peak in April 2012 shipment. Although the Southeast area has been damaged by the floods, in the Central and South American area, there is no such disaster, and inquiries are active as the dry season gets started after ending of the rain season. Although prices of GI base metals had been sluggish same as other steel products, bid prices are rising at this point and improvement of its prices is expected.
Prices of GI base metals had been sluggish up to the first half of negotiations for January and February 2012 shipment due to the seasonal factor and price drop of other steel products and were about USD 770 CNF for the Southeast area and about USD 750 CNF for the remote area. However, in the latter half of negotiations for February shipment, bid prices were raised by USD 20 to USD 30. It comes from the factor that prices of hot rolled steel coils of its material rose by USD 20 to USD 30.
Prices of GI base metals are highly sensitive to those of hot coils of its material. In case of the previous year, prices of hot coils surged towards April 2012 shipment, and following this, prices of GI base metals also rose largely exceeding USD 900 CNF. Against rise of bid prices of USD 20 to USD 30, the Japanese mills have almost passed acceptance as not being profitable at all.
Prices of flat rolled products have been rising worldwide except China, and of these, price rise of hot coils has momentum. In the USA and so on, they increased by USD 50 from late December 2011 till mid January 2012 and recovered to the level of USD 800 per tonne. The Japanese mills are also showing their stances to offer a USD 50 markup. If this is realized, prices of hot coils are expected to increase by USD 80 in total for February and March 2012 to the level of USD 750 CNF.
Against this, the Japanese mills are thinking to raise their prices of GI base metals as well by USD 80 at one time in March 2012 shipment considering price rise of hot coils of its material, and to have catch up the range of price rise of hot coils. Thicker gauge of GI base metals are 0.2 mm to 0.3mm, and in Japan, the mainstream gauge is thinner below 0.2mm. For this reason, competitors are limited, and of these, anomaly of Korea's POSCO becomes curious. The company has continued to offer low prices on the back of a weak won. Attention is drawn to see whether the company will change its sales attitude accordingly.
(Sourced from TEX Report Limited)
