Japan Steel Dealers Expect Better Profitability

Japanese steel distributors’ profitability shows sign to recover under higher steel market price. Near half distributors see the market price is increases according to answers from major 64 distributors in Tokyo and Osaka to research by Sangyo Press or Japan Metal Bulletin. The answers, however, indicate the demand is still severe when more than 60% answered the demand is flat.

The answers on the market price were 49.2% for increase or firm, 41% for flat and 9.8% for decrease or weak at the research to 64 distributors on shapes, bar, pipe and processed steel products in Tokyo and Osaka in late January. The price apparently increases for shapes while the price is flat for pipe and processed steel products. The answers on the demand were 18.7% for increase, 60.2% for flat and 21.1% for decrease. The price increases due to higher raw materials cost.

The answers on the market price outlook in February and March were 61.1% for increase or firm, 35.7% for flat and 3.2% for decrease or weak. The answers on the demand outlook in February and March were 22.7% for increase, 61.7% for flat and 15.6% for decrease. They expect the price increases more while they see better demand condition than now.

The answers on their sales in 2011 were 46.9% for increase, 51.6% for flat and 1.5% for decrease. The answers on their recurring profit were 42.2% for increase, 51.6% for flat and 6.2% for decrease. They expect better results under the better market condition both in volume and price.

Japanese steel makers announced price hike one after another in January under higher cost situation. The makers would increase the selling price when the raw materials cost is expected to increase more for iron ore and coal in April-June. However, domestic steel demand is still slow despite of the current inventory building demand. Depending on actual demand, the distributors’ margin could be squeezed by higher cost price and slow reselling price increases.