January 28, 2011, By TEE LIN SAY
PETALING JAYA: Local cold rollers have raised the prices of cold rolled coils (CRC) in view of the general increase in the cost of raw materials and the recent floods in Australia.
Sources said the latest sales were at US$840 to US$850 per tonne this week, up from deals done at US$780 to US$800 in the first week of January.
Cold roll coils are pre-dominantly used in the automobile sector, pipe making and furniture.
Chief Executive Officer of Kinsteel Bhd Datuk Henry Pheng said the increase in CRC prices was in tandem with international prices.
“The recent floods in Queensland, Australia has caused the loss of coal production and hence a shortage in coal supply,” said Pheng.
Australia provides for nearly half the world's coal for steel-making. Queensland produces about 80% of Australia's coking coal, contributing 10% to the nation's exports and 2% to gross domestic product.
OSK Research steel analyst Ng Sem Guan said the asking price for CRC was too high, and it was expected to ease.
“At this price, demand is lacklustre because most people are not confident of its sustainability and also because the Chinese New Year period is typically quiet. The second quarter is normally the peak period for the steel industry,” said Ng.
Almost two months of torrential rains and the worst floods in Queensland since 1974 had affected 30,000 properties, shut coal mines, cut rail lines and damaged crops.
Coking coal is used primarily in steelmaking. It is more vulnerable to supply disruptions than thermal coal because supply has been extremely tight throughout 2010. Most exporters were already producing at capacity before the Australian floods.
Some analyst are predicting that coking coal prices, which currently trade at over US$300 a tonne to reach US$500 due to the intensification of rain in Australia.
Ng said some of these mines which were disrupted, should resume operations in the next one to two months.
The hype in CRC prices was caused more by speculative traders.
The floods in Australia have also caused Japanese steel mills, which secured more than 50% of their coking coal from Australia last year, to seek other alternatives in North America, Africa and Indonesia.(souced:thestar.com.my)