Japan’s electric arc steelmaker Tokyo Steel has rolled over prices of finished steel products for September deliveries amid weak domestic demand on Wednesday, Aug 18. The company has rolled over the prices for all steel products for September deliveries amid uncertainty about the economic impact caused by the COVID-19 pandemic.
The steelmaker has held its offers firm despite stagnated demand in the domestic market. The company’s outlook for the third quarter also remained positive. Most steelmakers like JFE, Nippon have put off their blast furnaces amid a slump in demand, this could help Japanese mills to strike a balance between supply and demand in the coming days.
For the past two months, remained flat after a sharp rise of 3.5pc-7.3pc in July. Chinese exports of finished steel have slowed in order to meet bullish domestic demand as the Chinese government continues to infuse funds to mitigate the impact of COVID-19 pandemic.
Tokyo Steel has held its finished steel prices unchanged from July shipments with H-shaped beams prices at JPY81,000/mt ($768/mt), steel bars, including rebars at JPY59,000/mt and hot-dip galvanized steel coils at JPY70,000/mt ex-works. In the Southeast Asian market, Tokyo Steel’s finished steel prices are followed as a benchmark by other competitors including Posco and Hyundai in South Korea, Baoshan in China and Formosa Steel in Vietnam.
Prices were rolled over in order to gain clarity on the global price direction and to accommodate the steep hike announced in July, said sources to Davis Index.
Raw material bullish
Chinese steel futures increased sharply with iron ore import prices hitting a six-year high of $127/mt cfr China for 62pc Fe content. Market participants believe the strong demand from steelmakers has prompted seaborne iron ore prices to rise sharply. High ore prices are forcing many steelmakers to hold on to their offers despite no immediate steel demand.
In Japan’s domestic market, ferrous scrap prices rebounded in mid-July and have trended up in August. The company raised scrap prices successively for seven times. Ferrous scrap purchase prices were hiked by JPY2,500-3,500/mt from July 17. High ferrous scrap procurement prices narrowed margins for many EAF makers in Japan as steel consumption was weak in the first quarter of this fiscal (April-June).
Tokyo Steel has announced four successive price hikes for ferrous scrap purchases in August so far. Effective Aug 20, bids rose by JPY1,000/mt ($9/mt) for ferrous scrap delivered to all five of its works. Purchase prices for #2 HMS will be at JPY25,500/mt ($242/mt) delivered Utsunomiya works in the Kanto region, up by JPY1,000/mt from the prior price revision on Aug 18.