Starting merely from the beginning of autumn there was low business activity in East Asian steel market. Large summer purchases resulted in large stocks of steel products at distributors and ultimate consumers. Sales dramatically slumped yet the producers did not reduce prices. From one part, it was prevented by high cost of raw materials: spot quotations in early November for iron ore shipments to China were merely reaching USD 170 per ton CIF, the highest level since recent half a year. From another part, a considerable influence to regional prices was made by currency factor. Due to rising of local currency exchange rates to dollar, local prices in yuan, Taiwanese dollars, yens and wons became quite higher than export prices. As a result, producers focused on supplying national consumers rather than exporting.
Quotations however remained at quite high level, at least higher than consumers were ready to pay, requiring essential reductions. For example, Indian and Vietnamese traders considered Chinese hot rolled coils quotations very high, which were offered for $585-595 per ton CFR for a while. Though particularly in India and Vietnam local priced were falling in October. By the end of the first half of November Asian consumers used the major part of their stocks. Moreover price increases for flat steel products in US and EU displayed them they cannot count on lasting decrease any more. In result of this the demand which was low in the region during three month, started to increase. Yet the restart of sales has not led to growth of price. Contrary, some companies had to decrease their ‘virtual’ quotations to the more real level. For example, Japanese exporters agreed to reduce the cost of hot rolled coils for shipments to Korea to $630-650 per ton FOB, though earlier this product was offered for $650-680 per ton FOB.
Taiwanese company China Steel announced it is going to drop its local heavy plate price by equivalent of USD 45 per tonne t USD 50 per tonne in January -February to compete with Chinese products, which are offered for USD 620 per tonne t USD 630 per tonne CFR. Probably similar steps will have to make Korean companies as well. Currently Korean distributors buy Chinese merchant heavy plate in large quantities for the same US 620 per tonne to USD 630 per tonne CFR, Chinese and Russian hot rolled coils for USD 600 per tonne to USD 620 per tonne CFR. Even taking into account all expenses for customs and delivery, these products is less expensive for the ultimate consumers by USD 50 per tonne to USD 80 per tonne than local one. The demand in East Asian countries has not restored to the summer level yet. So, Vietnam is going to be out of the market for several months where the stocks of steel products are quite high. A serious problem became a surplus of heavy plate supply, appeared after start of the new mills in Korea this year. All these will restrain growth of prices in the region. Nevertheless, the market has obviously wakened up.