Japan Sheet Steel Supply to Get Tight in October-December

Japanese sheet steel supply is expected to get tighter when Nippon Steel starts to build inventory in October for blast furnace relining at Oita works when the firm manages to keep the shipment for contract users despite of output reduction at Yawata works after the fire in July. The supply is also decreasing when POSCO plans maintenance for mini-mill in October and Anshan Iron and Steel is suffered from blast furnace accident. Sheet steel supply for Japanese distributors will decrease, especially for hot rolled flat steel while domestic makers try to minimize the inventory for more shipment. Nippon Steel already noticed the intention to halve the hot rolled coil export to South Korean rerollers in October-December. Nippon Steel apparently reduces the hot coil sales for domestic distributors and construction applications by 30-40% and by as much as 50% for some buyers from same period of 2007, according to trading firm sources. Anshan Iron and Steel stopped 2 blast furnaces after accident on August 25. The firm already restarted one of the furnaces but the repair for another one could take for around one month and the outage could reach 200,000 tonnes during the period. The lower supply could impact on hot coil supply for Japanese buyers. POSCO plans maintenance for mini-mill with annual 1.8 million tonnes of output capacity from October to March 2009. The firm tries to cover the outage by output at other mills but the hot coil supply is expected to decrease. Japanese sheet steel supply is getting easier mainly in distributors’ market due to slower demand for building, appliances, machinery and automobile. However, the decreasing supply toward October-December could tighten the supply balance.