Nippon Steel Skips July H-Beam Order Receipt to Adjust Supply Balance

Nippon Steel notified H-beam distributors of skip of order receipt for July order, which is the first attempt in 18 months. The firm apparently tries to improve the supply balance when the dealers’ inventory increased for 2 months in a row through May for members of Tokiwa-kai, which is group of distributors dealing Nippon Steel’s products, and the stock could increase in June. The firm eyes another price hike as soon as possible through the supply adjustment effort.

Nippon Steel has adjusted the order receipt and reduced the production level but the firm decided the drastic action to reduce the inventory. The firm improves the supply balance at first before the price hike. The firm tries to find timing to increase the H-beam selling price after total 28,000 yen per tonne hike since February order when raw materials cost increases for July-September.

Tokiwa-kai H-beam stock increased by 7.9% to 196,400 tonnes at end of May from April while the dealers’ shipment decreased by 19.7%. The inventory rate increased by 0.74 points to 2.71 months due to higher stock and lower shipment. The dealers’ shipment decreases by more than 10% in June for some dealers. The supply gets looser with slower demand.

Tokyo Steel Manufacturing decreased the H-beam selling price by 7,000 yen per tonne for July order. After the announcement, the dealers’ market price decreased by 3,000 yen to 80,000 yen. The dealers welcome Nippon Steel’s action to support the market while the market was expected to decrease more.

Nippon Steel needs more than 5,000 yen per tonne of price hike to keep stable supply. The firm expects steel source supply will keep tight for long term under growing steel demand in the world.