Rebar Makers Target 60,000 yen/t in Tokyo

Electric furnace steel makers around Tokyo try to realize 60,000 yen per tonne of concrete reinforcing steel bar price for base sizes in and after February. Their shipment is higher than a year earlier level due to higher demand for building activities around Tokyo. They will secure certain margin between ferrous scrap cost and steel selling price when scrap price could rebound in and after Chinese New Year.

Local building activity increases mainly around Tokyo while the activity was very slow after Lehman shock in 2008. The steel makers’ rebar order receipt increases for condominium and housing demand. They supply the steel for northeastern Japan in first half of fiscal 2011 started April when makers around the area cannot meet the local demand after the major earthquake.

The makers around Tokyo keep the shipment in second half of fiscal 2011 due to higher demand for building. The eleven makers around Tokyo would ship more than 3 million tonnes of rebar in fiscal 2011, which is around 10% higher than fiscal 2010 level.

Scrap price decreases in the month when Chinese and South Korean steel makers reduce the purchase volume before and during Chinese New Year. The scrap shipping decreases from Tokyo to western Japan when electric furnace steel makers with lower order receipt reduce the output and scrap consumption. Local scrap supply is loose around Tokyo due to the lower demand. Local steel makers pay 29,500-31,000 yen per tonne for H2 grade scrap.

Chinese and South Korean steel makers are expected to resume scrap purchase from Japan after Chinese New Year. With the higher demand, Japanese scrap export price would increase. A rebar maker around Tokyo said the maker should realize 60,000 yen per tonne of rebar price to secure profitability when scrap price would increase and higher rebar price for February order represents higher shipment price in and after April.

The rebar makers expect local makers’ rebar shipment would be 3.2-3.3 million tonnes in fiscal 2012 thanks to firm demand. The makers try to realize profitable margin while they should adjust the production to the demand level.