Japanese Electric Furnaces Should Integrate and Increase Billet Export, Mr. Kurikawa Says

Mr. Katsutoshi Kurikawa, the chairman of Japan Non-Integrated Steel Products’ Association, said at a regular press conference on Monday domestic demand for building construction hit bottom after 3 years but the demand is unexpected to increase. He said Japanese economy would stay low due to higher yen rate. He also explained ferrous scrap market price recently keeps flat but may rise again since which is presently lower than integrated steel makers’ pig iron price. He commented electric furnace steel makers should maintain the selling price level for productive sustainability.

Mr. Kurikawa indicated Chinese rebar may be exported to Japan at 10 million tonnes per year if Chinese domestic demand shrinks in future. Serious oversupply of rebar would emerge in South Korea soon and in China 10 years later, he said. Mr. Kurikawa gave his view that Japanese electric furnaces should decrease ferrous scrap export but increase billet export by establishment of large-scale billet plants in Japan.

He pointed out 3 problems for Japanese electric furnaces: low operation rate, high power cost and high ferrous scrap price. He explained electric power charge is 1-2 yen per kilowatt in USA and 5-6 yen in South Korea while 12-13 yen in Japan. He said Japanese electric furnaces should be integrated to improve operating rate and lower productive costs for power charge and ferrous scrap. These improvements can lead to international competitive power.

Mr. Kurikawa explained Japanese electric furnaces’ annual crude steel production was average 410,000 tonnes per maker and average 280,000 tonnes per plant in fiscal 2009 ended in March 2010. He indicated one company should have billet output capacity at 3 million tonnes per year after the integration.