Japan Special Steel Bar, Wire Rod Shipment to Drop by 40% in 1H F2009

Japanese special steel bar and wire rod shipment will decrease by around 40% in first half of fiscal 2009 through September from same period of 2008, according to the makers. The shipment is lightly higher than January-March but the demand could keep very low level depending on the uncertain finished car export inventory adjustment progress automakers. Some steel makers expect the shipment could decrease by more than 30% in second half of fiscal 2009 ending March 2010 from first half of fiscal 2008 while the steel makers will finish the inventory adjustment during the period. The market has uncertain factors including steel raw materials price.

Steel makers estimate Japanese automakers’ production plan as of March increase by near 50% in April, by more than 40% in May and by more than 30% in June compared with a year earlier level. However, the makers concern the bar and wire rod shipment could keep very low level depending on automobile export recovery under slump in offshore market.

Japanese inventory of special steel bar and wire rod is overstock including semi-finished steel when the buyers reduce the purchase volume. The steel products’ supply is expected to be inventory adjustment through September. The steel makers expect the bar and wire rod shipment will decrease by more than 50% in April-June and by around 40% in July-September from same period of 2008. The makers expect the shipment in second half of fiscal 2009 is around 70% level of first half of fiscal 2008 but the shipment could decrease to lower level.

Japanese special steel bar and wire rod production increased by 5.4% to 11.36 million tonnes in fiscal 2007 from fiscal 2006, according to Ministry of Economy, Trade and Industry. The production increased by 6.2% to 5.81 million tonnes in first half of fiscal 2008, of which steel bar was 3.53 million tonnes and wire rod was 2.28 million tonnes.

The production decreased sharply in second half of fiscal 2008. The output decreased by 40% to 230,000 tonnes in January and by 50% to 190,000 tonnes in February from a year earlier. The steel industry interests expect the production could continue much lower level for more than a year than first half of fiscal 2008.