Nippon Steel to Reduce Plate Supply by 20% for Distributors

Nippon Steel will reduce the plate shipment for distributors by 20% for April-September from October-March period. The firm reduces the supply to secure plate for large diameter pipe materials along with shipbuilding and construction and industrial machinery applications. The supply for distributors decreases by more than 35% from same period of 2007. The reduced supply could accelerate the inventory adjustment for the still oversupplied distributors’ market. The lower supply could lift the market price along with 20,000 yen per tonne hike pressure. Nippon Steel cuts 20% order from distributors for April-September compared with October-March period. The reduction represents 34,000 tonnes when the supply is around 170,000 tonnes for October-March period. The supply in April-September is 36% lower than same period of 2007 when the firm reduces the supply by 20% for October-March from April-September 2007. The plate supply is short for strong demand when the demand expands for shipbuilding, construction and industrial machinery and energy industry. Nippon Steel said the firm has no choice but to reduce the supply for distributors when the firm ships UOE pipe for offshore buyers in April-September. Japanese integrated steel makers expand the output capacity and Nippon Steel invests around 20 billion yen to expand the mill in Oita works. The firm increases the output capacity by 600,000 tonnes per year in first half of fiscal 2009 to increase the supply for energy and shipbuilding high grade plate. The expansion work, which starts in second half of fiscal 2008, could reduce the output.