High Scrap Cost Suffers Carbon Steel Electric Furnaces

Japanese carbon steel electric furnace steel makers are suffered from higher ferrous scrap cost along with very slow building demand. A steel maker source said some makers could post monthly loss. The makers could revise the profit outlook downward for the full year to March 2008 though many makers expected 30-40% lower profit from previous year when they announced half year results. Electric furnace steel makers around Tokyo pay more than 40,000 yen per tonne for H2 grade scrap, which increased by more than 5,000 yen in a month and by 10,000 yen from a year earlier. The concrete reinforcing steel bar price increased only by 4,000-6,000 yen per tonne in a year. The margin gets narrower though they need more than 30,000 yen per tonne for base size. Rebar shipment by makers around Tokyo decreased by 20% in December from a year earlier. The shipment is expected to decrease more in January-March. The lower demand and higher cost could suffer the makers.