Prices for Japanese hot rolled coil (HRC) in the export markets have been following the global price trend, having increased slightly in Asia and the Middle East, though they have remained at relatively the same levels in Europe this month. At the same time, steel demand in Japan's domestic market has been sluggish despite promising new projects, and this has put pressure on exporters.
Offers for ex-Japan SAE1006 HRC to Asian customers have settled at $580-600/mt CFR in late May, compared to $570-580/mt CFR last month, with the lower end of the range corresponding to deal prices for June shipment in Pakistan. Meanwhile, ex-Japan HRC offers to Bangladesh and India have been voiced at $550/mt FOB, which translates to around $590-600/mt CFR. Offers in Vietnam have been heard at around $590/mt CFR and are considered unworkable for most buyers in Vietnam given the cheaper options from China and from local suppliers.
In the meantime, offers for ex-Japan HRC to the Middle East have been voiced at $580-590/mt CFR, with a deal for at least 10,000 mt reported to have been signed for June shipment at the abovementioned level this week. This means prices have gained around $10-15/mt over the past month.
At the same time, although the European market has remained one of the main points of focus for Japanese exporters, market insiders have reported business activity at a rather low level in May given the slow demand in the EU and the safeguard quota issue. Offers for ex-Japan HRC in southern Europe have been voiced at €600-615/mt CFR, versus €600-610/mt CFR in late April, though most bids have been heard at below €600/mt CFR.
According to sources, despite the promising new construction projects announced recently in Japan, domestic steel demand has remained sluggish while contractors have been cautious due to shorter work hours and labour shortages. “Demand is likely to remain weak in the short run despite several planned large construction projects including semi-conductor plants and data centres. Also, it is important to understand that lower demand from non-housing construction sectors, including office buildings, weighs on overall demand,” a representative of a Japanese mill told SteelOrbis.
According to the official report of the Japan Iron and Steel Federation (JISF) published on May 22, Japan’s crude steel production in April came to 7.05 million mt, down two percent from the previous month and down 2.5 percent year on year, decreasing for the second consecutive month compared to the same month last year. Besides, production of ordinary hot rolled steel amounted to 4.79 million mt, down by 8.5 percent month on month and down 5.1percent from the same month last year.