TEX reported that negotiations on wire rods for July to September quarter by the Japanese blast furnace mills have started for Asia and offer prices by the mills are slightly up by USD 30 per tonne to USD 40 per tonne from April to June quarter shipment levels.
In April to June quarter shipment, the mills had requested price increase by USD 200 per tonne to USD 250 per tonne from the previous quarter, and such increase was realized.
However, Korea's POSCO increased price of wire rods for the domestic only by KRW 160,000 (USD 148) while Taiwan's CSC kept its domestic price for July/August shipment the same.
Price increases of the Japanese mills are much bigger than those of the Korean and Taiwanese mills.
On the contrary, Baoshan Iron and Steel (Baosteel) of China decreased price of wire rods for steel cord by 200 CNY (USD 31) for July shipment of which case was the first time this year in Asia. It seemed for Baosteel to have showed great sensitivity to the situation that Baosteel began to reflect itself in slight drop in demand on cars in the domestic market, but such decrease was thought to be unexpected for the Japanese mills.
Each customer is frustrated with the Japanese mills' larger price increase for this quarter, showing backlash against such increase, and seems to ask restraint of price for next quarter shipment. However, as some small portions of price hike of raw materials since April last year have not been passed on to a customer, the mills are going to pass such portions on to price for next quarter shipment.
The Japanese automotive industry is rapidly recovering. Production of car parts cannot keep up with demand, and for example, supply of wire rods for the domestic is increasingly tightened. Such situation is foreseen to affect export supply. The mills will be called upon how they secure stable supply for export.
Demand on wire rods produced by the integrated mills in Asia except for China remains firm. In the Southeast Asia, there were the cases that the automotive industry reduced their production due to lack of parts, but the situation is almost recovered at present. For this reason, each customer is expected to lean towards acceptance of price increase if such increase is small.
( Source: www.steelguru.com )