Tokyo Steel Manufacturing Company Limited, Japan’s leading electric-arc furnace producer, has announced a hike in prices of all its finished carbon steel coils and sheet products by up to JPY 5,000-13,000/t ($46-120) for May ’21 deliveries. Last month the manufacturer had increased the prices by JPY 5,000/t for April deliveries.
Prices after revision are as below-
- Hot-rolled coil prices after revision stand at JPY 94,000/t (up JPY 10,000/t).
- Hot-dipped galvanized coil prices have moved up by JPY 13,000/t. For the April contract, the price was JPY 1,08,000/t.
- Prices for long steel were kept unchanged.
Further, the manufacturer has significantly raised the export price for HRC coils by $130/t to $930-950/t FoB basis against the previous month. Meanwhile, the prices for H-beams registered a decent $30/t increase to $740-760/t FoB basis compared with $710-730/t FoB basis a month back.
SteelMint analyses following factors behind the price hike-
1. Increasing global HRC prices-Global HRC export offers have been on an uptick since end-Jan ’21 when economies across the globe started recovering. Tokyo Steel kept its offer unchanged through the (Jan-Mar) Q1 CY ’21 to let the market absorb the previous price hike. This pushed the mill to raise its price to bridge the gap created between domestic and global HRC offers.
For instance, the Chinese HRC export offers have moved up by a significant $200/t to the average of $900/t as on 20 April ’21, contrasted against $700/t FoB basis in the first week of March ’21. This surge is majorly driven by the rising marine-freight costs alongside the most waited announcement on partial cut in China’s export rebate from 13% to 9% or its complete lift-off by the government. The offers for HRC from Japanese steel mills were at around $965/t FoB basis as on 20 April ’21.
2. Supply-side disturbance persists-The steel market continues to face logistical issues with the resurgence of COVID-19 contagion. This has posed a major risk for transportation and logistics in the country. On similar lines, the reduced availability of containers has led to a surge in marine-freight costs which has further led to an increase in global export offers.
3. Domestic market demand continues to grow; export allocation remains low-The impetus provided by the procurement of steel by commercial stores and distribution facilities due to the increased investment in redevelopment projects has pushed the domestic consumption higher in the country. Also, other economies across the globe too are on the recovery path which is providing to boost their domestic consumption volumes. This has led to reduced exports from a few major exporting nations keeping the supplies tight in the global market.
Outlook
The persisting demand-supply gap in the overseas market shall continue. Few major exporting countries are focusing on reducing carbon emissions and have started to cut excess capacities. This, coupled with the rising demand shall keep the prices elevated in the near-term.
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