TEX reported that export negotiations on steel wire rods for Asia by the Japanese blast furnace mills have started for October shipment.

It seems to be in the latter half of August for negotiations to go into full swing while a mill of them begins to offer its prices. Other mills have not fixed their offer prices yet but according to a feeling, they are on track to raise their prices by USD 20 to USD 30 from current ones.

In the environment of demand for wire rods in Asia, adverse factors are not found so far. The Chinese automotive industry is still strong. In Thailand, economic measures by the military Government have been penetrated, and manufacturing sectors like the automotive industry have not been worsened as much as initially expected. In Indonesia, although it has experienced a downturn in economic growth, production of wire rod users starting with car producers is said not to be bad. Therefore, it is said that demand in quantity is expected to be the same as this quarter.

Against the Japanese mills' price increase, customers are seen to rebel on the grounds of a price drop of raw materials for a blast furnace like iron ore. Against this, the Japanese mills have a policy to explain politely their necessity to raise prices due to increases of costs like an electricity charge and personnel expenses and to get consent.

A concern in the next quarter is that the No.4 wire rod mill (with a capacity of 700,000 tonnes a year) at the Pohang Steelworks of Korea's POSCO is said to have an enough capacity. Although its supply to Hyundai Motor is good, the company is thought to allocate certain quantity to export. The company had got orders below Japanese prices in the past. However, as the present management focuses on cost performance, its flexibility on prices like before is said to be narrowed.

Movement of the Chinese wire rod mills is also concerned. In the USA, Thailand and so on, an antidumping case has been filed against Chinese wire rods, and such wire rods are shut out. Chinese wire rod mills seem to seek outlets to Central and South America, Africa, Middle East and so on. Accordingly, there is a possibility for the market prices to be collapsed in the remote regions.

(Source - www.steelguru.com)