Japan Major Steels Mull Export Sheet Price Hike for July-September

Japanese integrated steel makers are in study to increase the sheet export price hike for July-September in coming negotiation. They recognize the market price hit bottom and rebounds in China while the price shows sign to hit bottom in Vietnam and Thailand. The integrated steel makers see the volume and price already started to improve from the bottom despite of the much lower level than a year earlier when some users and distributors in Asia increase the order. The steel makers try to improve the profitability for export transaction and they could offer US$ 100 per tonne hike, according to Japanese source.

The market price is around US$ 400 per tonne for hot rolled coil, less than US$ 500 for cold rolled coil and less than US$ 600 for coated coil in Asia. The price is less than half of the peak after the plunge since late 2008 while the price hit more than FOB US$ 1,000 for hot coil in summer 2008. The market price decreased sharply under competition of Asian steel makers when the users and distributors minimized the purchase in January-March to reduce the overstock.

However, the buyers reduced the inventory to normal level recently. Japanese trading firm source said the users expand the order to 1,000 tonnes level in and after May while the order was at most 200-300 tonnes level in January-March. Especially, buyers in South of China and Vietnam increase the appetite with expectation for higher demand due to higher demand for appliance in China and India under the stimulus package. The market sentiment could improve due to Chinese government’s order to reduce the steel output to normalize the supply balance.

Japanese integrated steel makers’ sheet steel export price is a little bit higher than international market but less than US$ 500 per tonne of hot coil price is loss making level. The makers’ profitable level is estimated to be US$ 600 for hot coil, US$ 700 for cold coil and US$ 800 for coated steel depending on iron ore price for fiscal 2009 started April.