TEX reported that negotiations on grain oriented electrical steel sheets coils for China are expected to start later in the week for next quarter (April through June) shipment.
The Japanese mills are going to quote markups of USD 300 same as this quarter's, considering recovery in demand of GO electrical sheets coils worldwide and penetration of USD 300 to USD 400 markup into Europe and US.
In China, demand for transformers of electricity distribution system keeps strong. Under the circumstances, the Chinese mills like Wuhan Iron and Steel increased the price of GO electrical steel for the domestic by USD 415 in total of 3 months for April through March shipment. As a result, prices of high grade are recovered to the level of USD 3,000 equivalent.
On the contrary, demand for GO electrical steel was maintained for a while but both price and quantity crashed last year when after Lehman's fall, prices of other steel items were recovering from a sharp fall. It is from this year that eventually, such market position has been recovered.
At present, main demand is for transformers of the electricity distribution system, and demand for transformers of electrical transmission which consume more GO electrical steel is foreseen to be added in early autumn. Consequently, supply of high grade GO electrical steel is foreseen to become tightened worldwide. Demand for it will recover completely.
Under the situation, the Japanese mills are going to recover the prices aiming USD 1,000 increase during the fiscal year. With this quarter (April through June), USD 300 increase was realized mainly on the spot basis. Under the line, they are going to propose USD 300 increase in price for next quarter. It will be possibly realized again under strong demand.
However, the problem is that Shougang Group and Maanshan Iron and Steel started production of GO electrical steel in China with capacity of 100,000 to 150,000 tonnes a year each. As both produce it to low grade quality, they will not compete with the Japanese and major Chinese mills. However, if their prices are too cheap, those prices are concerned to affect the prices to middle grade and moreover to high grade.
Source: Tex Report
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