Japan Electric Furnaces Relax Output Reduction

Japanese electric furnace steel makers are relaxing output cut range to year-to-year 20-30% from previous year-to-year 50-60%. They are supposing the demand bottomed out. The makers’ output increased by 7% to 1.29 million tonnes in May from April while decreased by 32% from a year earlier. The output increased by near 30% from January. The output especially increased for rebar and H-beam. However, some makers anticipate increased output may impact the market price or the supply and demand balance when the demand hasn’t recovered in earnest.

Japanese rebar output increased by 8% to 760,000 tonnes in May from April while decreased by 27% from a year earlier. The rebar output hit the bottom at 580,000 tonnes in January and has increased for 4 consecutive months since February. Japanese rebar shipment increased for April-June from January-March though the output exceeded the shipment. Major maker executive officer said makers should reduce the output less than the demand and refrain from risks of market price down.

Japanese H-beam output increased by 26% to 260,000 tonnes in May from April while decreased by 44% from a year earlier. A dealer source explained dealers’ inventory adjustment completed mostly in spring and dealers’ orders increased to H-beam makers. But H-beam output is expected to keep 260,000-270,000 tonnes per month for a while due to slow demand.

The market price is 60,000-61,000 yen per tonne for rebar around Tokyo and 70,000 yen for H-beam. Increased output may causes off-balance of the supply and demand.