Japan Major Steel Eye Sheet Production Cut with Lower Export

Japanese major steel makers could reduce sheet steel production as early as August when the export volume would decrease for Asian market. Asian market price of semi-finished steel and sheet steel shows sign to recover when POSCO increased the domestic selling price and Chinese government terminates tax rebate for steel export. However, the buyers could reduce the purchase volume for inventory adjustment in China and South Korea.

Japanese steel makers expect lower export volume for slab and sheet steel, especially for hot rolled coil in July-September while the makers increased the export under strong offshore demand. Japanese trading companies expect Asian steel market price would rebound with pressure by higher raw materials cost for integrated steel makers while they still cannot see when demand volume recovers.

Asian market price is near FOB US$ 600 per tonne for slab and around US$ 650 for hot coil. The price level is more than US$ 100 lower than the recent peak depending on the areas and countries. Japanese export interests expect the price could hit bottom sooner or later when steel makers’ profitability is marginal even for Chinese makers.

POSCO increased the selling price to US$ 660 per tonne level for slab and to US$ 760 for hot coil for July. Chinese government scraps tax rebate for hot coil and other steel export on July 15, which apparently encourages Chinese exporters to increase the export price.

Under the changing mood, South Korean rerollers try to settle hot coil price negotiation with Japanese steel makers sooner. However, Japanese steel makers could take more time to settle the price under higher raw materials cost and lower international steel price.

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