Japan Seamless Steel Pipe Supply to Tighten More in F2007

Supply of seamless steel pipe is expected to become much tighter in Japan in fiscal 2007 starting April. Seamless steel pipe demand seems to keep active for both domestic market and export, while the supply will decrease temporarily when domestic major seamless steel makers, JFE Steel and Sumitomo Metal Industries, will enter scheduled repairing of their equipment during April-June 2007. The supply and demand gap will expand.Seamless steel pipe export is sharply increasing for oil well tubular, mainly for high grade pipe, when oil majors are actively developing oil wells with background of high oil price. Seamless steel pipe demand is also stable for domestic constriction machinery, industrial machinery, shipbuilding and chemical plant. The domestic demand had decreased for years but turned to expansion after 2002.The supply volume is expected to reduce temporarily in Japan because Sumitomo Metals and JFE Steel will repair their equipment in the first half of fiscal 2007. Sumitomo Metals will repair a middle diameter mill in Wakayama works and Kainan area for about 10 days in June. JFE Steel will repair a middle diameter mill in Chita works for 2 weeks in May. Consequently the supply of middle diameter pipe seems to become even short. The users may face difficulty to procure enough volume.Domestic demand is expected to keep same level in fiscal 2007 compared with fiscal 2006. Seamless steel pipe makers will face difficulty to respond to users’ request for increasing supply. The supply tightness would reach a peak.Meanwhile Japanese seamless steel pipe import is increasing slightly especially for high alloy products as ASTM (American Society for Testing and Materials’ industry standards) and API (American Petroleum Institute). Japanese some steel pipe dealers are increasing procurement of the imports to meet strong demand.