Posted on 26 Jul 2017
Prices of steel reinforcement bars used in buildings have increased here as a decline in Chinese exports has lifted demand for steel products from Japan.
Standard rebar prices in the greater Tokyo area have risen to 57,000 yen ($510) a ton, up 2% from the end of last month, marking the first increase since late March.
And they are likely to climb further. Leading Japanese rebar supplier Kyoei Steel said Thursday it plans to hike prices by 2,000 yen a ton in August. As industry peers seem to be following suit, buyers are rushing to purchase before prices go up.
Suppliers have been emboldened by favorable Asian market conditions. Even as Chinese demand for steel building materials remains firm, the government has shut down polluting, mostly small-scale producers of poor-quality steel from scrap metal. Partly as a result, Chinese steel exports fell 30% in January-June from the previous year.
Shrinking Chinese supply starting in May led Southeast Asian steel processors to buy more billet and other semifinished steel from Japanese producers. Export prices of Japanese steel billet have risen 20% from May to more than 50,000 yen a ton. Billet exports by operators of electric arc furnaces a running at around 90,000 tons a month this year, up 50% from a year earlier, according to a major steel trading company.
Osaka-based Kyoei Steel decided to export billet from its Nagoya mill. And steelmaker Sanko Seiko, based just southwest of Tokyo, says exports to Southeast Asian countries such as Vietnam are growing. Rising output of higher-margin billet has crimped production of rebar.
Domestic shipments of rebar for condominium construction began to recover in July, following a slump in the April-June period. July shipments in the Kanto region including Tokyo are expected to jump by nearly half from the previous month on buying from a number of construction companies.
Going forward, steel bar makers will be under pressure to pass on rising costs to customers. Scrap prices will climb further amid heavy buying by Chinese operators of electric arc furnaces. Costs of such materials as electrodes are also expected to increase in the latter half of the fiscal year.
On the other hand, many construction companies have put procurement on hold, due to uncertainties in future steel scrap prices as well as the Chinese market. It may take some time until rebar prices reach the 60,000 yen a ton that electric-furnace steelmakers are targeting.
