TEX reported that circumstances remain unchanged in Asia under which prices of nickel based stainless CR sheets have yet to exceed a level of USD 3,400 per tonne CNF when it comes to export deals for shipments to China and elsewhere. Having a major impact are the world's volatile nickel prices.
In the middle of November 2010, LME nickel prices declined to below USD 11 per pound when Japan's stainless steel manufacturers were in the most important stage of negotiations on their export deals for December shipments to China. They had entered the negotiations with an offer price of USD 3,500 per tonne CNF for Ni based CR sheets to meet an advance in LME nickel prices. With a fall in LME nickel prices, though, various customers reacted at once and demanded a price reduction in the negotiations with the Japanese stainless steel manufacturers. Besides, LME nickel prices fell off to below USD 10 per pound in late November 2010. As a result, the Japanese stainless steel manufacturers had no option but to mark time.
POSCO was said to have once offered a price level of USD 3,500 per tonne CNF in negotiations in its exports of Ni based stainless CR sheets to China. But until now, the company has held down the price level to USD 3,200 to SUD 3,350 per tonne CNF. By comparison, prices on offer to China from Taiwan's stainless steel producers are estimated at a level of USD 3,200 per tonne CNF for Ni based CR sheets. Chinese buyers look poised to firm up purchases for immediate requirements alone if a price level of USD 3,200 per tonne CNF is negotiable. On their part, the Japanese stainless steel manufacturers favor standing on the sidelines as they find it difficult to settle payable deals at prices of USD 3,400 per tonne CNF or below.
At the end of November 2010, POSCO announced a domestic price reduction of stainless sheets by KRW 200,000 per tonne for December shipments. Likewise, Taiwan's stainless steel producers such as Yieh United Steel Corporation executed a domestic price reduction each in the equivalent of USD 120 per tonne. There were forecasts earlier of those price reductions in South Korea and Taiwan that would follow a decline in LME nickel prices. Every fall of USD 1 per pound in the LME nickel market usually brings a forced price reduction of Ni based stainless CR sheets by the equivalent of nearly USD 200 per tonne.
But both POSCO and the Taiwanese stainless steel producers held back on a domestic price reduction to a large degree like USD 200 per tonne this time. In China, meanwhile, the Wuxi stainless steel market for Ni based CR sheets has virtually moved sideways until now, with a fall of only CNY 300 per tonne in November. Besides, there are few cases so far of local realization sales toward yearend 2010, with no signs of a steep downturn in stainless steel prices.
In China's Wuxi area, distribution stocks of Ni based stainless HR and CR sheets totaled 170,000 tonnes in late November 2010, down from 210,000 tonnes in late September 2010. As a result, the distribution stocks stood at their lowest level since expanded pricing subjects of the Wuxi stainless steel market in September 2009. A major reduction in the Wuxi distribution stocks in late November is believed to have ensued from two events. For one thing, Taiyuan Iron & Steel Group Co, one of China's stainless steel majors, reduced its October to November production by a total of 50,000 tonnes because of equipment checkups at the company's works. For another, increased holidays were taken for stainless steel mills in and around the Guangzhou area due to the opening of the Guangzhou Asian Games. Still, it amounts to an incident in that the Wuxi stainless steel market has yet to advance even after a major reduction of the distribution stocks, which still indicates China's excessive stainless steel production.
LME nickel prices have moved up to a level of USD 10 per pound again since the beginning of December 2010. If they continue to rise, it would permit a price level beyond USD 3,400 per tonne CNF for Ni based stainless CR sheets when it comes to export deals of stainless sheets in Asia.
For their part, the Japanese stainless steel manufacturers have conservative expectations for their export deals before the lunar New Year holidays in 2011 since various customers remain noncommittal to new purchases for fear of volatile nickel prices. But the Japanese suppliers expect negotiations to perk up on their export deals after the lunar New Year holidays next year, given the demand season for stainless steel products.
(Sourced from TEX Report Limited)
