Japan Tighter Special Steel Bar and Wire Rod Supply

Japanese supply of special steel wire rod and bar is likely to get tighter in fiscal 2008 staring April than fiscal 2007. The demand increased by 3.9% to 11.12 million tonnes in 2007, which was the first 11 million tonnes mark. The demand grows due to high level activity of automobile, which represents around 60% of the steel items’ demand. The suppliers operate at full capacity both for integrated steel makers and electric furnace based special steel makers. However, the suppliers plan major maintenance and expansion work for the first half of fiscal 2008. Japanese automobile output is expected to increase by more than 2% to more than 21 million units including knockdown sets in fiscal 2008 from estimated output in fiscal 2007. The demand is expected to keep firm for construction machinery, which is second big application of the steel bar and wire rod. Nippon Steel’s Kimitsu works plans working to improve the quality level for the wire rod mill. Such downtime could reduce the supply temporally in the first half year. Nippon Steel said the firm cannot meet the higher demand from the users and adjusts the delivery schedule depending on the capacity. JFE Steel said the firm also rejects 10% or more order from the users. Despite of the higher demand expectation for fiscal 2008, Kobe Steel plans regular maintenance for bar mill in Kobe works in July-September and other special steel electric furnace makers plan maintenance. Nippon Steel idles wire rod mill temporally in Kimitsu both in the first half and second half. With the limited supply capacity, the makers could revise the products mix. Kobe Steel studies to reduce the small diameter steel bar output due to the low productivity. The makers could have to expand the output capacity additionally depending on the demand condition.