SINGAPORE The weaker yen
has led Southeast Asia to import more Japanese steel products,
particularly higher-grade product not produced by the region,
according to Chow Chong Long, chairman of the South East Asia
Iron and Steel Institute.
Chow didnt provide any
figures, but pointed out that the weaker yen caused the pricing
gap between Japanese and Chinese steel products in the import
market to narrow significantly, to $30 per tonne from about $60
to $80 per tonne previously.
Imports from Japan consist
mostly of high-end steel that Southeast Asia needs, he said.
Chinese imports, meanwhile, consist mostly of basic commercial
grades, which are seen to be competing with mills in the region
for the same market and resulting in affected countries coming
up with various measures to protect their domestic
Southeast Asia is a major
steel-importing region in Asia, and Japan has traditionally
been the largest exporter to the region in terms of its share,
even before the sharp devaluation of the Japanese currency to
spur growth. Japanese products account for more than 20 percent
of the regions imports.
Southeast Asia is poised to
become an increasingly important export destination due to the
presence of Japanese automakers and consumer electronics
companies, according to a report published earlier this month
by Credit Suisse Group AG.
As a result of the weakening
yen, the much-improved profitability for Japanese exporters
means mills there will become more aggressive in selling to the
overseas market, the report said.
The incremental steel supply
from Japan11 million to 22 million tonnes, based on a 90-
to 98-percent capacity utilization ratemight look small
vs. the total Asian market. However, it is equal to 11 to 23
percent of intra-Asia steel trade, 22 to 45 percent of north
Asian exports to south Asia, and 50 to 100 percent of the Asian
auto sheet segment, the banks analysts said.
While exports to south Asia are
where the competition is set to intensify, the impact will feed
through to the rest of the Asian steel market in the end, the
A version of this article was
first published by AMM sister publication Steel First.