Tight Colored Flat Steel Supply in Tokyo, Osaka

Japanese supply of colored flat steel gets tight around Tokyo and Osaka when rebuilding activity started for damaged areas along with some supply trouble at the makers. The supply is very tight around Tokyo when the demand increases for steel roof and wall when the government tries to accelerate construction of temporary houses in the major earthquake damaging area. The supply of galvalume steel sheet decreases after the quake also damaged the lines. The supply is expected to get tight around Osaka when the makers and dealers reduce the order receipt to avoid potential overstock by speculative inventory building activity.

Ministry of Land, Infrastructure, Transport and Travel targets 62,000 units of temporary houses in Miyagi, Iwate and Fukushima as the immediate housing for victims. House makers try to secure the materials including flat steel products. A trading firm source said the flat steel dealers get strong order for colored flat steel used in roof and wall and especially for roof deck. The dealers try to secure the materials by using inventory at the deposits to ship for the damaged area. Some dealers ship and process the materials at deposits around Tokyo.

Some of the suppliers around Osaka also ship the products for the damaged area. Some of them apparently ship the products in coil from deposits around Osaka while many of the dealers cannot participate in the demand rush due to the distance from the damaged area.

The quake damaged galvanizing lines including JFE Galvanizing & Coating’s plant in Kawasaki and Yodogawa Steel Works’ plant in Ichikawa. The colored flat steel supply decreases due to the production loss. The dealers cannot meet the higher demand after they reduced the inventory since price drop in summer 2010.

The flat rolled steel buyers around increased the purchase to build inventory in February and March before major price hike by the makers. The makers and dealers couldn’t accept all of the orders. The supply could get tighter after the quake due to the production loss. A dealer source in Osaka said roof material availability gets tight for some coolers and grades.

The tight supply could increase the market price level. The price increases especially for colored flat steel with 0.6 millimeters thick, which is used for roof, when the price was lower than other sizes before. However, the tight supply couldn’t take longer around Osaka when local building activity could decrease due to shortage of other materials under the quake impact. The makers should increase the selling price to cover higher cost price but the market could take longer time to reflect higher price under the potential demand shrink.