Japanese Non-Integrated Steel Producers’ Association’s chairman Katsutoshi Kurikawa said to a reporter of Japan Metal Bulletin domestic electric furnace steel makers face challenges including slow domestic demand, volatile raw materials market and unstable power supply. He warns each domestic electric furnace steel maker should secure sustainable level of margin for survive under the severe condition while the industry could reorganize itself to survive international competition.
Mr. Kurikawa warns domestic construction industry gets severer year and year when Japanese population could decrease to 90 million in 2055 from the peak of 128 million in 2004. He said the construction demand would decrease after the investment decreased to around 40 trillion yen recently from more than 80 trillion yen in mid-1990. Mr. Kurikawa said another challenge for domestic electric furnace steel makers is volatile ferrous scrap market. He said the market already links to international market and the domestic price increases due to strong offshore demand even with slow domestic demand. He recognizes domestic electric furnace steel makers cannot secure margin under volatile scrap cost and slow domestic demand. Mr. Kurikawa said stable power supply also a key for the electric furnace steel business while Japanese government tries to launch new law for renewable energy with relief measure for heavy power consumption industries. He showed concern future stable power supply with unstable future for nuclear power plants. He said without nuclear power generation, domestic electric furnace steel makers’ cost would increase by around 3,000 yen per tonne. Mr. Kurikawa said construction steel import could increase when population of Chinese and South Korea could peak near future. He said Chinese concrete reinforcing steel bar could be powerful competitor for Japanese makers when Chinese rebar makers have variable cost competitiveness when many of them use a lot of pig iron. Mr. Kurikawa said Japanese electric furnace steel makers would experience major consolidation to compete with import and to utilize domestic scrap resources. He indicates Japanese makers could expand billet export by utilizing scrap and excess steel making capacity depending on yen rate level. He expects Japanese electric furnace steel industry could change itself to major billet exporter to follow growing international market while the industry has served mainly domestic market.