Japan's Nippon Steel to raise HRC offers for Mar shipments

Japan's Nippon Steel is revising its hot rolled coil (HRC) price policy upwards with regard to its March shipments. The steel major will further increase its offers from the previous week's levels.

Consequently, Nippon Steel has decided to raise prices of HRCs by more than $100/tonne against the February price, for March shipments. Currently, the steel major is negotiating for March shipments, where customers' bid prices are heard to be more than $850/t CFR levels.

Reasons for price hike

• Rising raw material prices: Nippon Steel further said that the price hike was being implemented in light of rising coal prices, Indian mills' price hikes and customers' bid prices.
  
  

"Our main reason for increasing the prices is the surge in key raw material costs. Coal prices have risen further since last week to $445/t FOB Australia, up $129/t since end-Nov'21. Iron ore fines prices have touched $132/t CFR China, up by $47/t since end-Nov'21. The costs of the main raw materials have hit their highest levels in 10 years," reasoned a source.

The source added: "It will expectedly be difficult for mills in each country to make a profit under the current global market prices."

• Indian mills raise export offers: As export prices of Indian mills have bottomed out and reversed, inquiries from customers who had been holding back on purchases are rapidly increasing.
  
  
• Supplies to dip in SE Asia: On the other hand, supplies are expected to decline in East Asia. One major South Korean mill plans to begin blast furnace maintenance over the next four months. A Taiwanese mill will start the maintenance and refurbishment of its hot strip mill from mid-March, almost a month ahead of the original schedule.
  
  

Nippon's price offers

"We will offer HRC prices to Southeast Asia at $850-900/t CFR and to other regions such as Southwest Asia, Middle East and Europe at $950/t CFR," a source informed.

Market trends in each region

India: Indian mills have raised their export offers for March shipments to all regions in response to the sharp rise in coal prices, and have also started offers to ASEAN at $800-830/t CFR.

In fact, SteelMint's India HRC export index spiked by $58/t to $780/t FOB east coast from the previous week's $722/t. This is mainly because mills are decently booked in terms of export offers for February and are eyeing higher prices for March shipments.

China: China's interest rate cut and economic stimulus measures are expected to lead to a recovery in demand after the Chinese New Year, and domestic prices here are likely to bottom out.

Europe: In the Continent, domestic HRC prices continued to rise due to higher energy costs.

Middle East and Turkey: Market prices rose due to higher offer prices from Indian mills.

Brazil and Russia: Where slabs are concerned, export prices rose in Brazil and Russia, and import prices in ASEAN also rose accordingly. Higher semi-finished prices pushed up HRC prices.

Japan's crude steel output

Japan's crude steel production increased almost 15% to 96.33 mnt in 2021 reveals information available with SteelMint. As per Japan's Ministry of Economy, Trade and Industry (METI), the country's crude steel output is slated to rise 1.9% in the Jan-Mar'22 quarter, helped by the recovery in the manufacturing industry, including ship-building and machinery. In FY19, Nippon Steel's crude steel output was at around 42 mn t.

Outlook

As the supply-demand balance is expected to improve after the Chinese New Year, Nippon Steel said it will consider raising offer prices for April shipments as well.