TEX reported that negotiations on May 2011 shipment of GI mother coils for Asia are now under an uphill battle. In the condition that export to Middle East is stagnated due to political uncertainty, the Chinese mills started export at cheaper prices, and in addition to that, the Indian rolling mills are newly breaking into the Southeast Asian market which makes a customer see the downward level by about USD 50. This seems the reason for tough negotiation.

China's export quantity of March increased sharply up 98% from February to 4,910,000 tonnes. Although details by item are not disclosed yet, export quantity of GI and GI mother coils is estimated drastically being increased. Wuhan Iron and Steel maintained the GI price of May shipment for domestic while Baoshan Iron and Steel reduced it by CNY 300. In response to this, the distributors were flustered and sold their stock as a realization sale one after another which caused to drive the market price lower.

It will be one of factors that some rolling mills in India break in the Asian market. As the production capacity of the blast furnace mills in India is upgraded, there are the cases that production of some items exceeds demand. They say that it is the case of GI and GI mother coils, and the rolling mills are exporting products of excess capacity at cheaper prices.

It is the demand season of galvanized sheets coils in April to May before the rainy season in Asia including Southeast Asia. Naturally, price hike was expected. However, even from Japan, flustered export appeared concerning depressed domestic demand caused by the massive quake, and each customer is waiting and seeing downward trend in price of GI mother coils. About USD 100 markup was realized for April shipment while for May 2011 shipment, the price fell in contrary.

Under such situation, the Japanese mills are quoting markup in order to pass the jump in material costs but it seems to be difficult to do so. At present, the bidding price of GI mother coils from Vietnam is being raised slightly. Flustered sale will not continue so long. The demand season should absorb such price gap.

Accordingly, the mills are avoiding forced aggressive sale regarding that it's when they have to be tolerant, and they are waiting for opportunity to recover the price gap with June shipment.

(Sourced from TEX Report Limited)