Japan Special Steel Bar and Wire Rod Demand Keeps Low after April

Demand for Japanese special steel bar and wire rod is expected to keep the bottom level in and after April. A special steel maker source said the demand kept flat in March from February and seems not to recover in April. Some secondary processing makers forecast the operation rate would lower by 20-30% during the first half of fiscal 2009 (Apr-Sep) compared with fiscal 2007 even if users finishes the inventory adjustment.

Raw material price negotiation between steel makers and resource producers is unclear though the negotiation for hard coking coal has concluded. The demand from automobiles seems to require substantial time for recovery. The demand for special steel bar and wire rod kept flat in March from February. The demand has declined month by month since December 2008.

Hard price negotiations are expected between steel makers and steel product users when raw material price is unforeseeable while steel makers hold raw material and steel product inventories at high prices.

Japanese Special steel bar output decreased by 41% to 230,000 tonnes in January from previous month, according to Ministry of Economy, Trade & Industry. The output totaled 5.306 million tonnes from April 2008 to January 2009. Special steel wire rod output decreased by 28.9% to 194,000 tonnes in January from previous month, which totaled 3.45 million tonnes from April 2008 to January 2009.

Special steel bar and wire rod output had kept upward trend thanks to the strong demand from automobiles and construction machines. The output represented the first decrease in fiscal 2008 since fiscal 2001. The output could hit below 10 million tonnes for the first time since fiscal 2003.