Nippon Steel Cuts All H-Beam Order from Dealers for May

Nippon Steel announced on Tuesday the firm skips the order acceptance for H-beam from distributors for May order. The firm said this is the first attempt to cut 100% order for the firm though the firm has cut some portion of order from distributors. The firm tries to improve the supply balance in distributors’ market through wide supply cut for lower inventory when building demand is expected to recover. The firm tries to get through the difficult condition by reducing the volume, not to reduce the price. Nippon Steel has kept the order acceptance at low level since November 2006 when the firm cut order by 20-30% from distributors from October. The output reduction has certain positive impact on the supply balance when distributors’ inventory decreased in April from March for the first time in 4 months. However, the firm sees the distributors’ sentiment is still weak. The firm decided the drastic measure to improve the market though the firm expects the demand is firm mainly for large building projects. The firm sees Japanese demand of H-beam keeps firm, international steel price is firm and ferrous scrap price is still high despite of recent drop. The firm said the internal steel source is tight to meet strong demand for high valued steel items. The firm hopes domestic H-beam distributors understand the market condition and try to improve the supply balance. The firm expects the distributors share the market view when higher cost and tight supply could lift steel prices. The firm stops the operation of large shape mill at Sakai works for maintenance for 3 weeks from end of July. The firm said the outage is longer than usual due to renewal of old part of reheat furnace though the regular maintenance takes 7-10 days. H-beam distributors’ stock held by members’ of Tokiwa-kai, which is group of distributors dealing Nippon Steel’s products, decreased by 1.8% to 271,400 tonnes at end of April from March. Makers’ lower output reduced the stock and the arrivals to dealers around Tokyo decreased by 22.8%. However, the dealers’ shipment was slow with 4.3% lower shipment at total in Tokyo, Osaka and Nagoya. Nippon Steel tries to reduce the inventory more.