Rebar Makers Raise Price to 60,000 yen/t in Tokyo

Electric furnace steel makers around Tokyo increased the selling price of concrete reinforcing steel bar to 60,000 yen per tonne for base size with 19 millimeters diameter in the week. The price is the highest level since August 2004. They try to improve the profitability under higher cost for ferrous scrap and subsidiary materials. The market price is likely to increase after the makers realize the higher price in early 2007.

The makers including Godo Steel and Tokyo Tekko’s joint sales force and Sanko Seiko and Mukoyama Steel Works’ joint sales force increased the selling price to 60,000 yen per tonne in the week. They decided to increase the price when they couldn’t absorb all of the higher price by cost down effort when ferrous scrap price increased by 40.4% or 9,500 yen from the beginning of the year.

The demand increases for construction including condominium building. Local rebar output is expected to increase by 20% to around 4 million tonnes in 2006 from 2005. The production is the highest level after bubble economy. The makers have 3-3.5 months of order backlog and manage to meet the tight delivery schedule. The supply is likely to get tighter when general contractors will order materials for major projects in early 2007.

Rebar distributors also try to increase the reselling price. They expect the market price will increase by 1,000 yen to 61,000 yen per tonne delivered directly to users and to 67,000 yen for sales from inventory. They try to improve the profitability through the higher reselling price under the firm demand.