Mon Aug 29, 2011
* Q2 flat steel exports down 11 pct q/q to 4.3 mln T
* Hot coil exports to S. Korea dived 50 pct in June yr/yr
* Asia's steel market seen hitting bottom - traders
By Yuko Inoue
TOKYO, Aug 29 Reuters) - Japanese steelmakers' exports of flat steel products are expected to fall 10-20 percent in July-September from the previous quarter due to a surge in the yen and sluggish sales to South Korean firms, their biggest customers, traders said.
But they also expect a recovery in the quarter after that as car production picks up.
Japanese steelmakers, the world's largest exporters in 2010, saw their exports of flat steel products --hot-and cold-rolled coils and galvanized sheets -- fall 11 percent to 4.3 million tonnes in April-June.
Low-priced exports from China dragged down the market and the yen's steep rise against the dollar and other major Asian currencies made their products less competitive. Exports were also hit by a fall in global car production after Japan's March earthquake disrupted the supply of parts.
"A 10-20 percent fall in exports of steel sheets is very likely this quarter. They've found it very hard to strike deals because of a wide price differential," said an official at a Japanese trading company, who declined to be identified.
Nippon Steel Corp and JFE Steel Corp , the world's No.4 and No.5 steelmakers respectively, and South Korean customers are still negotiating export prices of hot coils for July-September.
South Korean firms want prices below their April-June contract price of $800 per tonne on cost and freight (CF) basis, while Japanese firms are determined to raise prices, traders said.
Japan's exports of hot coils to South Korea plummeted 50 percent in June from a year earlier to 166,000 tonnes and in the three months to June, they fell 33 percent to 671,500 tonnes, according to the Japan Iron and Steel Federation.
The trading company official said they will sag further in July.
Analysts also estimate annual production capacity by South Korean mills has expanded by 5 million tonnes in the past two to three years.
"On top of the strong yen, Hyundai Steel's production boost and inventory adjustments at downstream producers has had an impact," an official at another trading company said.
But there are some bright signs, including recent announcements by Baosteel and several Chinese mills on price hikes for September bookings.
Chinese steel makers' offer price on hot-rolled coils have inched up to $730 per tonne on CF basis, traders said. China's crude steel output in July inched down 1.1 percent, or 632,000 tonnes, from June to 59.3 million tonnes, although it was still 15.5 percent more than a year earlier.
Many industry experts expect a jump in Japan's car output later this year will keep Japanese steelmakers busy and operating at full capacity in the October-March period as they need to boost supply to domestic manufacturers. Even so, trading companies expect there will be leeway for exports and the companies will step up exports if prices are attractive.
Japan's steel industry estimates Toyota Motor Corp and other Japanese carmakers will be producing a combined 5.3 million cars in October-March to make up for lost sales after the earthquake. That is 26 percent more than the same period a year ago or a 40 percent jump from April-September.
* Q2 flat steel exports down 11 pct q/q to 4.3 mln T
* Hot coil exports to S. Korea dived 50 pct in June yr/yr
* Asia's steel market seen hitting bottom - traders
By Yuko Inoue
TOKYO, Aug 29 Reuters) - Japanese steelmakers' exports of flat steel products are expected to fall 10-20 percent in July-September from the previous quarter due to a surge in the yen and sluggish sales to South Korean firms, their biggest customers, traders said.
But they also expect a recovery in the quarter after that as car production picks up.
Japanese steelmakers, the world's largest exporters in 2010, saw their exports of flat steel products --hot-and cold-rolled coils and galvanized sheets -- fall 11 percent to 4.3 million tonnes in April-June.
Low-priced exports from China dragged down the market and the yen's steep rise against the dollar and other major Asian currencies made their products less competitive. Exports were also hit by a fall in global car production after Japan's March earthquake disrupted the supply of parts.
"A 10-20 percent fall in exports of steel sheets is very likely this quarter. They've found it very hard to strike deals because of a wide price differential," said an official at a Japanese trading company, who declined to be identified.
Nippon Steel Corp and JFE Steel Corp , the world's No.4 and No.5 steelmakers respectively, and South Korean customers are still negotiating export prices of hot coils for July-September.
South Korean firms want prices below their April-June contract price of $800 per tonne on cost and freight (CF) basis, while Japanese firms are determined to raise prices, traders said.
Japan's exports of hot coils to South Korea plummeted 50 percent in June from a year earlier to 166,000 tonnes and in the three months to June, they fell 33 percent to 671,500 tonnes, according to the Japan Iron and Steel Federation.
The trading company official said they will sag further in July.
Analysts also estimate annual production capacity by South Korean mills has expanded by 5 million tonnes in the past two to three years.
"On top of the strong yen, Hyundai Steel's production boost and inventory adjustments at downstream producers has had an impact," an official at another trading company said.
But there are some bright signs, including recent announcements by Baosteel and several Chinese mills on price hikes for September bookings.
Chinese steel makers' offer price on hot-rolled coils have inched up to $730 per tonne on CF basis, traders said. China's crude steel output in July inched down 1.1 percent, or 632,000 tonnes, from June to 59.3 million tonnes, although it was still 15.5 percent more than a year earlier.
Many industry experts expect a jump in Japan's car output later this year will keep Japanese steelmakers busy and operating at full capacity in the October-March period as they need to boost supply to domestic manufacturers. Even so, trading companies expect there will be leeway for exports and the companies will step up exports if prices are attractive.
Japan's steel industry estimates Toyota Motor Corp and other Japanese carmakers will be producing a combined 5.3 million cars in October-March to make up for lost sales after the earthquake. That is 26 percent more than the same period a year ago or a 40 percent jump from April-September.
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