Dropping Rebar Price in Tokyo

Concrete reinforcing steel bar market price is decreasing at 54,000 yen per tonne for direct shipment from the makers to users and at 59,000 yen for the distributors’ inventory sales around Tokyo. The local makers’ order receipt is expected to decrease to 80,000-90,000 tonnes level in November from 100,000 tonnes in October. Some transaction is less than 50,000 yen when the users of general contractors press for lower price under their competition to get construction order. The rebar market is likely to keep decreasing before seasonal demand slump in January-March.

The rebar makers’ order receipt decreased to 100,000 tonnes in October from 310,000 tonnes in July, 290,000 tonnes in August and 170,000 tonnes in September. The decreasing demand reduced the volume while speculative advance order lifted the number in July and August. The order receipt is expected to decrease more in November when the demand is very slow partly due to cancellation and putting off for construction plants.

The rebar makers study further production cut by expanding yearend and New Year holiday compared with usual year. The production could decrease from monthly 200,000 tonnes recently. The makers try to improve the supply balance by the production cut in order to keep the price level.

The rebar market price shows no sign to hit bottom both for direct shipment and the dealers’ inventory sales. The price gets toward lower level when general contractors reduce contract price for rebar process and placing and the processors try to minimize rebar cost. The processors, who are suffered from low level operation rate, are likely to try to get order at lower price.

The rebar makers face lower margin when rebar selling price decreases and ferrous scrap market cost keeps around 25,000 yen per tonne. The makers try to reduce the cost to secure profit but their profitability gets worse. The rebar market price could decrease to less than 50,000 yen for the first time since 2004 when scrap cost was less than 20,000 yen. The rebar makers’ business condition is much worse.