The September rise in prices for steel products in China has eased the tension that has arisen in the Asian market in recent months when the Chinese dropped lower and lower their export quotes. Somewhere in mid-September, Chinese companies have begun to increase the value of their products to foreign buyers, a total of having increase by $20-30 per ton compared to the minimum benchmarks the beginning of September.
So, the price of Chinese hot-rolled coils with delivery in November traded at the end of September at $515-525 / t FOB, while some producers tried to raise them to over $530 per MT FOB. Steel plate reached the milestone of $520-525 per ton FOB, while cold rolled coils has risen from about $570 to $590-600 / t FOB. As stated by representatives of Chinese companies, demand for their products was high enough. A number of consumers in East Asian countries hurried to make deals before prices had to rise even higher. At the same time, the Chinese do not hide their intention to continue to rise in October, after the celebration of the anniversary of the founding of the people's Republic of China (1 October).
But the successes achieved by the Chinese, did not affect the policy of steel companies from other countries in the region throughout September, continued, on the contrary, to give their quotes. At the end of the month some Japanese and Korean companies were ready to sell hot-rolled coils at $520 per MT FOB and even cheaper, although most of the proposals for delivery of this product was received for $540-550 per ton FOB. Most market participants are cautious and do not see the reasons for the significant improvement of the market situation at the beginning of the fourth quarter. A number of Taiwanese and Korean companies have lowered domestic prices for flat products in October at $10-25 per ton.
Indeed, the increase in prices for Chinese products did not lead to any qualitative changes of the situation in the region. The demand for rental both in China and in other countries in East and South-East Asia remains relatively weak due to the ongoing depression in industries such as automobile and shipbuilding, household appliances, construction. Some experts hope that the launch of the new program the Federal reserve in buying government securities will spur growth of the us economy, which will contribute to increased demand for Asian consumer goods. However, in the near future no major changes for the better certainly will not happen.
Similar concerns expressed in relation to possible growth of prices for Chinese steel products in October. In the domestic market rise by the end of September finally came to naught. Moreover, in the last week it is observed a downward correction. Therefore analysts do not exclude that in October the Chinese would have to reduce export prices. In addition, the customers that signed contracts during September, can now again take a long enough pause.
The vast majority of buyers in the region with the purchase of the most popular types of steel products such as hot rolled coils and commercial steel plate, are primarily driven by price factors. This and due to the desire of Asian companies to bring the value of their products to Chinese indicators.
Apparently, to stabilize the market situation in the region, it is necessary to limit the amount of offers. Japanese company JFE Steel announced in late September, about a 20% decline in production of steel plate mill in the fourth quarter. This should remove from the market is about 230-250 thousand tons of products. China's Baosteel group has set an example for other market participants, temporarily stopping one of their enterprises in the Shanghai area annual output of 3 million tons of steel per year. Maybe in the fourth quarter as well will have to do and other Asian steelmakers.
 
Victor Tarnavsky
Rusmet.ru