Prices of Japanese imported thin sheet will bottom out in the first quarter (January-March 2023). The increase in global prices is due to a series of hikes in domestic selling prices for overseas mills which led to an increase in the price of imported sheets. In addition, the price trend of imported materials are likely to support prices in the Japanese thin sheet market, according to overseas mills and distributor sources.
High prices were corrected by producers, but Chinese producers and others increased their prices in dollar terms, resulting in a consolidated level of selling prices for each mill in Japan. The current offer price appears to be in the middle of JPY 120,000 ($920) to import cold-rolled coils. Hot-rolled coil prices were significantly low at one point, but has begun to dissipate.
However, domestic demand in Japan is weak. Automakers’ production recovery has been delayed due to semiconductor shortage, and construction demand has not gained momentum yet.
The reason for the upward trend in overseas markets was the relaxation of zero-COVID policy in China. Moreover, sales of hot-rolled coils fell to the $500/t level, which triggered an upward trend. Major East Asian steel mills also increased their selling prices on the domestic market: Baoshan Steel (China) and China Steel (Taiwan) raised prices for the second month in succession.
The price of hot-rolled coil rose to $600/t in Asia, including Southeast Asia, but some manufacturers say that the manufacturing cost of hot-rolled coil is likely to be $650/t, and therefore still unprofitable at current price levels. As a result, sources believe that the market will continue to rise after the Lunar New Year, and will be in the $700/t range. Despite the uncertainty, there are some who hope it will hover around $800/t.
The current price of imported sheet sheets is still high compared to the market price in neighbouring countries. However, if prices rise to the mid-$700/t, it is likely to be undervalued even at the current exchange rate of dollar to yen ($1 = JPY 130).
Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.
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