Japan Construction Galvanized Sheet Demand to Stay Low in F2010

Japanese construction demand for galvanized steel sheet and 55%-aluminium-zinc coated sheet would remain low for fiscal 2010 starting April as level in second half of fiscal 2009 when the makers operate at 70% of the capacity, according to Japanese maker sources’ forecast. The shipment increased from the bottom in January-March 2009. However, the shipment stays at low level. The makers are likely to experience hard time to pass higher cost price on the selling price when hot rolled coil price is expected to increase.

The construction using galvanized steel output was as low as 30% of the makers’ capacity in January-March 2010. The output increased to around 70% of the capacity in second half of fiscal 2009. However, the makers cannot make money at the operation rate. The market sources see the construction demand could increase due to the government subsidies for long life housing. However, the subsidies are expected to have limited efficiency.

Hot rolled coil price is expected to increase in fiscal 2010 while zinc and aluminum price is much higher than April 2009. The makers would have to increase galvanized sheet price to cover the higher cost.