Japanese steel major Nippon Steel has increased its hot-rolled coil (HRC) export offers by $70/t to $600/t FOB for early-February shipments. The previous offers stood at $525/t FOB for dispatches till end-January, as per data maintained with SteelMint. The company is closely monitoring the global HRC market, and offers shall be revised for shipments for the second week of February or later on that basis, informed sources.
Factors behind the increase in export offers-
1. Lower capacity utilisation in Q1CY23: The Japanese steel major hinted towards a lower operational capacity in Q1CY23 amid the maintenance shutdown. The impact on production shall be roughly 15% as compared with Q4CY22, said reliable sources.
2. Currency appreciation: Appreciation of Japanese yen (JPY) against the US dollar ($) is another factor behind the push towards higher offers. In the first 19 days of December 2022, the average conversion of $1 stood at JPY 136.2 which was around JPY 142.2 in November and JPY 146.9 in October. Thus, amid the appreciating JPY against $, mills’ export realisations would be lower and hence they decided to increase their export offers.
3. Demand improvement: Japan’s crude steel production is estimated to be 22.13 million tonnes (mnt) in the October-December quarter (Q4CY22), according to the country’s Ministry of Economy, Trade and Industry (METI). Production is expected to rise by 1.4% q-o-q compared to 22.44 mnt in the July-September period. Demand from automobiles is expected to recover while demand for industrial machinery is likely to remain stable. However, the overall recovery is expected to be gradual, as demand in the civil engineering and construction sectors remains low.
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