/Rusmet.ru, Victor Tarnavskiy/ Global steel market is in a difficult situation. Long products prices in Far East are falling and semis and scrap prices follow them. The growth in China has also slowed. It is not easy for metallurgical companies form the USA and Europe to increase the quotations. The analysts say about the threat of the slowdown.
Nevertheless, East Asia Steel manufacturers continue their policy of flat steel prices increasing. In mid-April some regional companies announced the increase of domestic and import prices for May-June. In particular, Korean manufacturers, Posco and Hyundai Steel increased May quotations for HRC 23-25 % at once, to about $766 per ton EXW. Export quotations for Korean HR steel with June delivery have reached $740-770 per ton FOB.
Japanese companies acted in similar way. HRC prices with the delivery to East Asia and Middle East reached $740-760 per ton FOB. For the consumers from ASEAN countries the price was $800 per ton FOB. Japanese plate has also reached $800 per ton FOB and more. CRC are quieted at $850-890 per ton FOB.
However these increases are not final. Japanese metallurgists say that in the Q3 flat steel price is to grow by another $50-100 per ton due to further increase of raw materials prices, iron ore, first of all. Thus the aim price for HRC in July is $850 per ton FOB, the aim price for plate is $900 per ton FOB. According to manufacturers, they have no choice, since slabs prices in East Asia have already reached $700 per ton CFR and market quotations for iron ore reached more than 30% in two recent months. Although there was a stabilization in this market in recent days, iron ore price is unlikely to go down soon.
However, the prices for any products are determined not only by the expenses, but also by the payable demand. Here Asian companies have the same problems as their colleagues in other regions, which faced growing counteractions from the consumers. But comparing with other parts of the world the situation in Asia can be called rather positive. Steel products consumption in China, Korea, Japan, and in ASEAN countries in recent months is sustainably increasing. The data about Japanese export expansion show the situation improvement. In Feb. 2010 Japanese companies exported 3.42 mio tons of steel, which was up 81.6% on the same period of 2009; in March Japan exported 4.018 mio tons (60.2% growth). At that the supplies to China , Korea, and South East Asia grew most of all.
The main problem of large manufacturers from East Asia is a controversy between raw materials exporters’ intention to determine iron ore and coking coal prices quarterly and the yearly contracts on direct supplies of steel products to the lead consumers. Japanese companies JFE Steel и Nippon Steel want also to offer the clients quarterly prices correction according to raw materials costs, but the idea was not admitted by the consumers.
Nevertheless, raw materials factor in any case will affect global steel market. Iron ore prices increase in the Q3 is undutiful. That is why the metallurgists will have to increase their prices. East Asia manufacturers have all chances for this.