Japanese Makers Suffered from Severe Hot Coil Export Competition

Japanese integrated steel makers are suffered from severe steel sheet export in both volume and price. Their hot coil export price is currently less than US$ 500 per tonne. Integrated steels can barely gain profit or post loss at the price level. A source of Japanese integrated steel maker said they expect the export volume and price could return to the relatively moderate level for July-September but the recovery might delay into October-December.

Re-rollers in South Korea, the main importers of Japanese hot coil, were under the operating rate as low as below 50% for January-February. However, it is heard the re-rollers are recovering their production volume in March after inventory adjustment advanced. South Korean re-rollers are increasing material procurement when they seem to expect for export increase to Southeast Asia.

Japanese integrated steels are in severe price competition with POSCO of South Korea and other mills in China, Taiwan and Australia. South Korean re-rollers are shipping cold rolled steel sheet at US$ 500-550 per tonne and coated steel sheet at around US$ 550 per tonne for Southeast Asia. Re-rollers are offering wide-range price cut against hot coil makers in balance with their export price.

Japanese hot coil export has decreased for 4 straight months since October 2008. The export was 254,000 tonnes in January 2009, 56.6% lower from a year earlier and 64.5% down compared with September 2008.