Japan Plate Supply to Get Tighter

Japanese plate supply is getting tighter toward second half of fiscal 2006 ending March 2007 when the main users of shipbuilders and construction and industrial machinery industries keep the high level activities while the plate makers accept higher export order. The supply is likely to get tighter after August when the demand recovers for bridge and building from the slump. Domestic plate makers have expanded the output in years to meet growing domestic demand. The plate output increased by near 2 million tonnes in past 2 years to 12.05 million tones in fiscal 2005 from 10.25 million tonnes in fiscal 2003 and 11.42 million tonnes in fiscal 2004, according to Japan Iron and Steel Federation. The 1.824 million tonnes of output in April-May was over 10% lower than 1.998 million tonnes of order receipt by the makers. JFE Steel decided to seek 5,000 yen per tonne of price hike for contract price with shipbuilders for October shipment. The firm said moderate hike needs to keep the stable supply while the firm tries to improve the lower price level than other steel items. Domestic plate demand for shipbuilders and construction machinery is likely to keep the high level in years when shipbuilders keep more than 3 years of order backlog and construction machinery makers keep the high level activities. A plate maker source said the bridge demand recovers earlier than expected and the demand increases for expansion of Haneda airport. The source said the rolling schedule is tighter than expected in July-September. The supply is expected to be tighter in and after October.