H-Beam, Rebar Price to Drop for Months in Tokyo, Osaka

Market price of steel products for construction could keep decreasing through spring 2009 in Tokyo and Osaka. Many market participants expect the inventory adjustment would finish in spring and the market price would recover toward second half year while some interests concern the demand could be around half of 2008.

The market price was 70,000 yen per tonne in Tokyo and 72,000 yen in Osaka for concrete reinforcing steel bar and 80,000 yen for H-beam in Tokyo and Osaka in the beginning of 2008. The price reached the peak of more than 110,000 yen for rebar and more than 120,000 yen for H-beam in August after surge of cost for ferrous scrap and raw materials and wide price hike by makers.

The market price started to decrease in autumn due to plunge of scrap market, lower purchase volume by general contractors and buyers and worldwide slower economy. The market price decreased to 85,000 yen per tonne in Tokyo and 78,000 yen in Osaka for rebar, which was 28,000 yen and 37,000 yen lower than the peak, while H-beam price decreased by 25,000 yen to 102,000 yen in Tokyo and by 40,000 yen to 87,000 yen in Osaka.

The market could be slower in 2009 when the dealers’ shipment already dropped sharply due to cancel or postpone of capital expenditure. The dealers concern the demand would keep slow and the buyers could become insolvent. They prepare for the worst scenario under uncertainty for demand recovery and inventory adjustment position.

The rebar makers expand the production cut to more than 50% from a year earlier level while Nippon Steel reduces H-beam supply for distributors by 90% and Tokyo Steel Manufacturing reduces the production by more than 50% in January-March. The makers and distributors try to improve the supply balance through the unprecedented actions while the current market is oversupply. The effort could improve the supply balance toward spring and could stop the price drop.