Japan Construction Steel Pipe Demand to Keep Low in 1H F2010

Japanese demand of structural steel around and square pipe for construction will decrease by 30-40% in first half of fiscal 2010 started April compared with the peak in fiscal 2007. The pipe makers get higher order since March when the buyers try to secure the products before the price increase while the actual demand is still slow under low level construction activity. The pipe makers and distributors could suffer lower profitability when the demand is expected to keep slow in the second half.

Japanese building activity by private sector keeps very slow for condominium and office building construction and manufacturers’ capital expenditure and the government reduces the civil works. The pipe makers reduce the operation to meet low level demand since late 2008 when the construction steel pipe demand decreases while mechanical tube demand recovers for automobile.

A welded pipe maker expects the production will increase by 5-10% in April-June from January-March due to higher inventory building demand from the buyers with expectation for higher price. However, the maker sees the actual demand is low as January-March.

The pipe order to the makers will decrease in July-September after the speculative purchase by the buyers in April-June. The positive aspect is the lower order could reduce the distributors’ inventory. The demand is same level in first half of fiscal 2010 as second half of fiscal 2009, of which the demand was 30-40% lower than fiscal 2007 level.