Japan Steels Reduce Construction Materials Output

Japanese steel makers reduce the output of construction materials under very slow building activity due to transition process for new building standard. Building start is delayed under stricter permission process reducing construction steel transaction and shipment. Nippon Steel reduces the output by around 10% in October-December while construction materials specialized electric furnace steel makers will reduce the output by more than 20%. Steel industry is suffered by the slow demand when general contractors’ order delays. Nippon Steel reduces the construction materials output by 100,000 tonnes for October-December. The firm reduces the order acceptance of H-beam from distributors and prepared for further output reduction depending on the market. JFE Steel and Sumitomo Metal Industries also try to figure out the market condition. Electric furnace steel makers, which are heavily suffered from slow building demand, started revision of output plant for November to reduce output widely. Largest concrete reinforcing steel bar maker of Kyoei Steel reduces the output by 20% in November and December from a year earlier. Largest H-beam maker of Tokyo Steel Manufacturing reduces the output in line with the lower order receipt. The slower building activity is heavily impacting on the mid- and small-sized building construction. The slower demand could impact on annual 22.52 million tonnes of carbon steel output by electric furnace steel makers, which represents around 20% of Japanese raw steel output. The construction steel demand could decrease by around 1 million tonnes in October-December period if the demand would decrease by 10%. If building start in September, which is announced on Tuesday, decreases widely after 42% drop both for residential and nonresidential building in floor space, domestic construction demand would experience wide drop for the year ending March 2008. The industry interests, who enjoyed firm demand mainly urban areas including Tokyo, Osaka, Nagoya and Kyushu area, urge the government should normalize the building start process.