Japanese Blast Furnace Mills Eying Wire Rod Price Recovery For Exports to Asia

TEX reported that the Japanese blast furnace mills are expected to commence negotiations on steel wire rods for Asia for shipments of the next quarter (January March next year) as early as mid November. At present, they are studying their offer prices, and as a feeling, they are on track to request to recover the past adjusted price (a decrease in price). Attention is paid to how much they request a price recovery.

Customers requested to lower prices corresponding to a price drop of iron ore being raw materials for a blast furnace in negotiations for shipments of this quarter against the Japanese mills. Responding to this request, there were cases of prices to be adjusted in certain areas but most of them were settled at levelling off of prices.

So far, the blast furnace mills see that demand for wire rods is brisk. The automotive industry in Thailand is still sluggish but it begins to look more hopeful such as a case that Honda carries out the construction of a new factory. At this stage, the mills are to compensate the decline in Thailand for the automotive industry in Indonesia.

In Korea, Hyundai Steel is foreseen to place Dongbu Specialty Steel under its umbrella sooner or later. Hyundai Steel is supplying flat products exclusively to Hyundai Motor and is likely to do the same for processed products of steel bars and wire rods at some future date. As the Japanese mills are supplying high-quality bars and wire rods which POSCO does not produce to Hyundai Motor and so on, they seem to be affected by it from 2016 onward.

However, products for general use are different. POSCO's supply of bars and wire rods to Dongbu Specialty Steel will be up in the air in future. If so, POSCO is likely to try to turn out Japanese products from the Korean market. As there is a mill of which export ratio of wire rods for Korea is high, the Japanese mills are seen to be gradually affected by it.


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