Posted on 09 Sep 2013
The Japanese blast furnace mills are in a direction to specialize in export of high and middle grade steel plates with the abandonment of low grade ones next quarter as the domestic demand for plates is strong.
The domestic demand for plates is expected to increase for construction and civil engineering like bridges next quarter, and in addition to this, demand for public work projects and rehabilitation will also become apparent. And also, supply quantity of plates for shipbuilders having been slumped in the past is recovering. The mills are now proceeding with negotiations on plates with the domestic shipbuilders, and an increase in prices is in the assured situation. The plate inventory of old contracts carried by the distributors becomes few and has been replaced by that of new contracts of which prices were raised by more than 10,000 yen. Accordingly, an increase in prices of plates for the distributors becomes certain. Now, each mill's capacity of plate manufacturing is in a state being full due to an increase in demand and price recovery. As among the Japanese mills, some reduced the number of shifts, and some will conduct its periodic maintenance for 40 days next year, their limited capacity is also added to such circumstances.
It is certain that the burden of such impact of the brisk demand for plates is shifted to export. In anticipation of a drastic decrease in export of plates mainly for the Korean shipbuilders and in order to cover such decrease, the Japanese mills had put their effort into developing customers of plates for general use in Middle East, Africa, Central and South America and so on. The situation is that Japan's export quantity of plates to Korea in January through June this year stayed at 440 thousand tons, down 45.5% from the same period last year. Possibly by developing new markets or customers, its export quantity of plates in January through June this year to the whole world became 1,768 thousand tons, down 0.9% from the same period last year. It looks somehow as if a decrease to Korea were to be almost replaced by an increase in export to other regions.
However, even for new customers which were acquired with much effort, the indications are that the mills may become unable to supply from next quarter. It is because due to limited iron source, products for general use are cut first. Under the circumstances, the Japanese mills are foreseen to specialize in export of plates to high and middle grades passing over general use plates.
Inquiries of plates to high and middle grades are brisk mainly related to energy. There are many orders related to energy especially those to pressure vessels like LNG tanks. Further, orders of plates for offshore structures are lately increasing rapidly. In particular, orders from Korea are increasing. For the offshore projects of which orders have been received by heavy industrial companies like Hyundai Heavy Industries, POSCO, Hyundai Steel and so on are certain to be supplying plates but the portion which they cannot supply enough has come around to Japan. As a capacity of heat treatment of the Japanese mills is limited, the mills even need to adjust their delivery schedule, and shipments of present orders are foreseen to be in the spring next year. Among some mills, there are the cases that even for the domestic projects, delivery adjustment is necessary as a rolling schedule is filled up to January next year.
As the supply position of plates becomes tightened, there is little doubt about an increase in prices of plates for general use. The Japanese mills are in a direction to move to the world of plates to high and middle grades at high prices, to create a structural change in export and to seek improvement in profitability without waiting for a price rise in the market.
Source - The TEX Report
