Japanese Steel Dealers Expect for Demand Upturn in 2012

Majority of Japanese steel dealers around Tokyo and Osaka expect for domestic steel market upturn or conservation in 2012, according to a questionnaire research carried out by Japan Metal Bulletin in mid January. Total 60 major steel dealers responded to the survey. 31.7% of them answered year-to-year market upturn in 2012 while 55% answered y/y conservation and 13.3% downturn. Many dealers suggested large size building projects are expected to start mainly around Tokyo while public investment such for reconstructions in the disaster areas of the Great East Japan Earthquake would also commence.

One plate dealer source answered the demand is firm for Tokyo Gaikan Expressway, new Shinkansen lines and condominiums. Another major dealer explained worker shortage continues in Tohoku area when reconstructions are starting in the disaster areas.

As for steel market price trend in 2012, 26.7% of sixty dealers selected upward while 56.7% answered unchanging and 16.6% downward. Raw material costs for iron ore and coal decrease for January-March while ferrous scrap price is lowering in recent days. General contractors and other large-lot users continuously require price cut to dealers. However, many dealers feel the current market price is at the bottom level.

As for the dealers’ sales and profits, 43.4% answered their net sales value could increase year on year in 2012 while 50% answered their net sales would keep almost same level from 2011. Answers for recurring profit improvement accounted for 38.3% while 50% of the dealers viewed their recurring profits would keep flat in 2012. Dealers expect for the sales volume increase slightly and try to secure moderate margin.