In recent weeks there is steel products supply excess in Eastern Asia. Excessive production of flat steel production in Korea and Japan and low damnd for construction in steel in most countries of the region caused steel excess and the prices decrease. In late Nov. some Korean and Japanese companies offered HRC at $580-600 за т FOB, whereas in the first half of last month the prices were $620-630 за т FOB at much lower demand.
Only Chinese companies do not provide this dumping policy. In late Nov. they announced the increase of HR steel export prices up to $610-630 за т FOB. Rebar and high-carbon wire rod prices reached the highest level in recent eight months. These products are offered for export at $650-660 and $660-690 за т FOB (for steel micro-alloyed with boron).
According to Chinese statistic institutions, Chinese export of HRC in Oct. amounted a little more than 200 thousand tons, which was almost 7 times as little as in July. This characteristic is expected to increase slightly in Nov.
The absence of the interest to foreign market is explained, first of all, by high domestic prices. In early Nov. the prices in Chinese market stabilized. Average rebar prices exceed 4500 Yuan ($675) per ton from the stock and HR steel prices are close to 4400 Yuan ($660) per ton. In the second half of Nov. Chinese manufacturers somewhat decreased the sales prices.
According to the Chinese experts’ forecasts domestic prices for steel products in next two months till Chinese New Tear holidays (Feb. 3) will be rather stable.
In the second half of Nov. scrap and iron ore prices significantly increased. There is scrap shortage in China and local traders have to increase the import of expensive US and Japanese scrap. Iron ore import volumes also increased, since many companies are making stockpiles in case of winter shipment delays.
Generally Chinese specialists’ forecasts for 2011 are moderately optimistic. The increase of HR steel average prices by $40-55 per ton, to $660 per ton from the stock are expected. CISA representatives say that the growth in Chinese metallurgy that lasted for recent 10 years was slowed. The total steel making capacity of Chinese metallurgy is expected to increase in 2011 to 20 mio tons only, to about 720 mio tons a year, whereas steel products consumption volume will grow to 50 mio tons. Production growth rate will fall. If this year steel output volume in China is estimated at 625 mio tons (up 9% on 2010), 650-660 mio tons are expected in 2011 (4-5.6 % growth).
China will remain one of the world key exporters of steel products. However, export volume will decrease. By all appearances, we should not beware of cheap Chinese rolled steel in global market in next months. But Russian and Ukrainian suppliers should not relax, since the competition from Japan and Korea is increasing.