Japanese Rebar Demand May Hit Below 7MT in F2010, 10-20% Y/Y Down

Japanese steel makers’ shipment of concrete reinforcing steel bar for domestic market is estimated to declinie to less than 7 million tonnes per year in fiscal 2010 starting in April, decreasing by 10-20% from fiscal 2009. The annual shipment becomes below 7 million tonnes for the first time since fiscal 1976. In Japan, condominium building starts have stayed 30-40% level compared with a year earlier since spring 2009. Condominium constructions are expected to maintain inactive in fiscal 2010.

Non-Integrated Steel Producers’ Association estimated the annual rebar shipment would total 7.24-7.92 million tonnes in fiscal 2009, decreasing by 10-20% from fiscal 2008. The 9-month shipment seems to have totaled approximately 6 million tonnes for April-December 2009. The annual shipment is expected to become around 7.5 million tonnes, almost a half of the peak at 14.18 million tonnes in fiscal 1990.

The demand is likely to worsen in fiscal 2010. Condominium inventory (completed but unoccupied) around Tokyo was approximately 7,400 units at the end of December 2009, which still kept the high level. Condominium constructions are also slow around Nagoya and Osaka. In other areas, it is not an unusual case that there is no new starting condominium in a month.

Japanese rebar makers are suffered from monthly losses due to low shipment volume and high ferrous scrap price. Ferrous scrap market price has surged by 4,000-5,000 yen per tonne since the beginning of this year. Rebar makers are trying to raise the selling price in order to recover the profits.