Japan Wire Rod Import from South Korea Surges in 2009

Japanese averaged price of import wire rod from South Korea decreased to 68,600 yen per tonne in February, which is lower than before price rise in 2007, according to Ministry of Finance. The import rod price from China had already dropped to the level before the price rise. The import rod price continued increasing during the period from beginning of 2008 to mid-year. Most of Japanese import rod is from China and South Korea.

Averaged price of import rod was 53,000 yen per tonne from China and 68,600 yen per tonne from South Korea in February while the price was 114,600 yen from China in August, which was 70% higher than January 2008. The price was 103,700 yen from South Korea in September-October, which was 47% higher than January 2008 level.

However, the import rod price plunged to 76,500 yen per tonne from China in November and decreased to about 50,000 yen in January 2009, which was less than half of the recent peak. On the other hand, the price from South Korea remained 100,000 yen per tonne until the end of 2008 but it started to decrease since January 2009. The price in February was 17,000 yen or 20% lower than March.

While overseas rod price declined, import volume increased. Total import volume for January-February was 34,800 tonnes, which increased by 26% compared with same period a year ago. At the same time, imported South Korean rod increased its Japanese market share. The import volume from South Korea in 2 months was 17,700 tonnes, up by 85% from corresponding period while the import from China was 16,600 tonnes, down by 6.9%.

If the import continues at the same pace as January-February, the volume of import is around 200,000 tonnes per year, which is not so high in years after 2005. However, Japanese demand is stagnant under weak economy and inventory adjustment. The price gap between overseas and domestic, which is around 50,000 yen per tonne, could pressure on domestic market.