Jul 19, 2022
Asian Steel Markets Hit by Inflows of Cheap Russian Metal
2022-07-22
(Bloomberg) -- Unusual flows of cheap Russian products are roiling corners of the steel trade in Asia, weighing on prices and prompting one key regional producer to warn of possible trade counter-measures.
Russia is trying to send more steel eastwards after sanctions blocked major western markets while war in Ukraine disrupted Black Sea exports, according to Asian steelmakers that monitor trade across their region. The increased volumes are set to pile pressure on markets already suffering amid China’s demand slowdown.
Taiwan’s China Steel Corp. is gathering evidence in case it needs to take steps “against unfair trade behaviours,” it said on Monday. China could turn to discounted steel from Russia when its import demand recovers, instead of importing products from Asia, according to Japan’s Tokyo Steel Manufacturing Co.
While much smaller in scope, the shifts in the steel trade carry echoes of other markets from coal to crude oil, with Russia seeking new buyers in the face of international sanctions or boycotts. Much of the country’s surplus steel, especially the semi-processed product known as billet, flowed to Turkey. But Russian steel mills are now also pushing to sell at lower prices in China and other Asian destinations.
For Tokyo Steel -- which produces the alloy from scrap metal -- the appearance of Russian products is favorable because of the knock-on effects on the region’s scrap prices.
Billet producers across Southeast Asia, which have become big suppliers to China in recent years, are cutting production. That means they are buying less scrap feedstock, including from Japan, making more available for Tokyo Steel.
Russian steel products are “a completely new factor that hasn’t ever been seen before” in the ferrous scrap market, Soichiro Tsuda, an executive overseeing purchasing at Tokyo Steel, said last week in an interview. Japan’s scrap prices have fallen by more than a quarter since a high in April. “Scrap prices will likely fall further, or at best stay at current levels.”
In Taiwan, China Steel -- a producer of similar scale to U.S. Steel Corp. -- said it was monitoring potential inflows of hot-rolled Russian steel products amid reports of cut-price Russian offers.
“Russian steel mills are eager to turn to the Asian market to sell at prices far lower than the international market in order to eliminate excess steel products,” the company said in a statement. “Rumors of large-scale sales of low-priced steel products in Russia have been boiling over, seriously disrupting the order of the domestic steel market.”
©2022 Bloomberg L.P.
Source: BNN Bloomberg
