Tight Cold Rolled Flat Supply to Continue in Asia

Asian cold rolled flat steel supply is expected to keep tight for longer term when the demand increases for automobile and appliances in China while short term expansion is limited for cold rolling mill with annealing line to make high grade cold rolled flat steel in East Asia despite of the raw steel output capacity expansion. Japanese integrated steel makers get strong demand from offshore buyers. The Japanese makers will start the export negotiation in and after April and they study wide price hike as high as US$ 200 per tonne of increase under tight supply.

Asian market participants see cold rolled flat steel is the tightest sheet product in Asia. Higher Chinese automobile production is the main factor for the tight supply while cold rolled flat steel is used for various applications. Japanese integrated steel maker source said the Chinese automobile uses 300-350 kilogram per unit of cold rolled flat steel while Japanese automobile uses 100-150 kg per unit. Chinese automobile production is expected to increase by 15% to 16 million units in 2010 from 2009 increasing the cold rolled flat steel demand. Chinese demand also increases for flat panel television and packaging. The higher demand is the main factor for tight cold rolled flat steel supply.

Under the supply balance, cold rolled flat steel led Asian sheet steel market price increase since late 2009. Japanese steel makers realized more than US$ 700 per tonne of export price for cold rolled flat steel recently.

Japanese integrated steel makers are still studying how much they should increase the export price for fiscal 2010 starting April when they are still on the way to raw materials price negotiation for fiscal 2010. The makers should increase the selling price when iron ore and coking coal cost is expected to increase widely.

Asian electrogalvanizing steel is expected to get tighter when POSCO plans around 60 days repair at the line in Gwangyang works from March. Japanese steel makers could increase the export price as wide as cold rolled flat steel.