TEX reported that export negotiations on steel wire rods of a blast furnace mill seem to pass over the peak for July 2012 shipment. Prices are left unchanged overall but those for China are subtle. As Baoshan Iron & Steel decreased its domestic wire rod prices for July 2012 shipment, the Japanese mills are facing difficulty to increase their prices and even prices to be left unchanged are questioned.
At the initial stage of negotiations, such information spread that Korea's POSCO quoted markups of USD 20 to USD 30 for export, and hopes of possibility of markups even gradually were raised to the Japanese mills for July 2012 shipment. However, it looks somehow as though reactivation of financial turmoil in Europe and the market drop of flat products in the Asian area dampened negotiations on wire rods. Furthermore, as the European mills go on an offensive to export for the Asian area due to sluggish sales in the European region, a mood of expectation of price increase faded out and the situation becomes that the mills are forced to change into a defensive stance how they keep their customers.
Taiwan's CSC left once its domestic prices of wire rods unchanged for July and August shipment but as it could not collect enough quantity, it seems to have discounted virtually by 30 to 40 in dollar conversion by adopting the quantity discount scheme. That country is exporting much steel bolts and nuts for Europe and the USA but the European crisis is likely to strike that country directly. Baosteel noticed its domestic prices of wire rods for July shipment a day behind those of flat products to each customer. Its contents are that prices of wire rods for steel cords of tires and wire rods of high carbon were decreased by CNY 180 and CNY 100 respectively. The company maintained its prices for shipment of April through June 2012 but it seems to have been unable to resist the market drop.
POSCO also quoted initially price increase but it is unknown whether the company has still kept such stance. Information of its contract conclusion is not heard.
In the Asian area, European major wire rods mills like ArcelorMittal and TATA Europe have participated into the market. Their prices are said to be USD 850 CFR in case of wire rods for steel cords for China. Those are cheaper by USD 100 than those of Japan and Korea. It is foreseen to come from sluggish sales in the region and the weak euro.
In the USA, car sales are good, and demand for tires is firm. However, the situation is difficult to raise prices. It is because there are many electric furnace mills of wire rods in that country. With this, prices are easily affected by scrap prices, and as scrap prices dropped largely, each mill lowered the scrap surcharge. As a result, wire rod prices dropped virtually. At present, the Japanese mills are proceeding with negotiations for shipment of July through September 2012 and if they could maintain their prices, they can be said to be successful.
In July 2012 shipment, each customer strengthened a wait and see attitude. Accordingly, contract quantity will possibly decrease. Shortly, negotiations for August 2012 shipment are predicted to be also undertaken. However, the environment seems to be getting severe.
Source - TEX Report Limited
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