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In October, MEPS grade 304 hot and cold-rolled coil average prices in Asia were at their highest level since September 2011. Transaction values ​​for cold-rolled coil increased by more than 50% in China in October. during the last twelve months. In Japan, the prices of flat products increased to the last figures reached in October 2008.
The pace of stainless steel price increases has accelerated in recent months, despite a slight decline in activity in the region. This is due, in part, to higher input costs, including the rebound in nickel prices in October. Despite the commodity movements, Asian stainless steel transaction values ​​are expected to remain elevated in the near term. This is the result of China’s ambitious carbon reduction targets and the country’s current electricity crisis.
Steel mills consume massive amounts of electricity, and many Chinese producers had already started cutting production to comply with environmental restrictions imposed by the government and, more recently, due to power rationing in several provincial states. A number of Chinese steelmakers are said to be diverting production to their facilities abroad, especially in countries like Indonesia, to circumvent national limitations.
In addition, the removal of export tax rebates by Chinese authorities encourages domestic steelmakers to sell any material they produce to local manufacturing companies, rather than shipping it to overseas customers. Changes in production and export conditions, by the world’s largest steel-producing country, are impacting wider steel supply chains, as well as Asian markets.
In the medium term, it is likely that Chinese, Japanese and South Korean stainless steel producers will continue to favor deliveries to their local markets. This despite increased demand from several regions, including Europe. Many Asian factories are said to be cautious with the volumes they offer to European customers due to EC safeguard quotas, shipping delays and increasing transportation costs.
However, despite a reduction in imports from many Far Eastern suppliers, considerable tonnages of cold-rolled coils produced in Taiwan cleared customs at European ports in early October and the quota was quickly filled. Nonetheless, it is expected that buyers in all regions will continue to rely more on their local suppliers than they have been in recent years.
Source: MEPS
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