Tokyo Steel’s Takamatsu Works Closedown Has Little Impact on Rebar and Wire Rod Market

Tokyo Steel Manufacturing, Japanese largest electric furnace steel maker, decided to suspend Takamatsu iron works in Kagawa Prefecture, Japan. Rebar market size in Shikoku area is estimated at 200,000-300,000 tonnes per year and rebar production at Takamatsu iron works was averagely 3,500-4,000 tonnes per month in April-September 2011. Tokyo Steel has held almost 100% rebar shares in Shikoku. However, the market condition is unlikely to change largely since local dealers can resell rebar delivered from Tokyo Steel’s Okayama iron works.

Rebar dealers are rather anticipated on Tokyo Steel’s plan to utilize Takamatsu site as a stock and sales yard. One large dealer source suggested local wholesalers may be impacted if Tokyo Steel holds large size stocks of rebar, H-beam, plate and hot rolled coil at Takamatsu site. Dealers are also interested in whether Tokyo Steel continues rebar production at Okayama iron works or not. Tokyo Steel’s monthly selling price announcement has large effects on Japanese rebar market. A rebar trader said domestic market trend may change if Tokyo Steel stops rebar price announcement.

As for ferrous scrap trade, one scrap dealer analyzed Takamatsu iron works was a small productive site as an electric furnace steel maker’s plant and, for instance, local scrap dealers in Tokushima Prefecture has already shifted main supply route to Okayama iron works since ferrous scrap purchasing price has been higher at Okayama iron works than at Takamatsu iron works. Thus the impact of Takamatsu iron works’ suspension would be slight

Takamatsu iron works has also covered wire rod production. One carbon wire rod product dealer explained wire rod production at Takamatsu iron works seems to have kept below 1,000 tonnes per month currently and the suspension might not have a large impact on the market. The dealer said the users have reduced orders to Takamatsu iron works due to lower price of imported wire rod. Chinese wire rod is cheaper while the product quality represents the same level as domestic products.