Demands for steel continue moderately despite shortages of labor and machining ability ? Tokyo Steel Co., Ltd.

2015/07/22

Tokyo Steel Co., Ltd. held a press conference at the headquarters conference room on 21 July 2015 and announced its steel sales prices and the market trends for August.

Managing Director and Chief Director of Sales, Kiyoshi Imamura said, “We have not yet seen signs of a recovery in the overseas market where China has maintained productive capacities and exports at a high level. Meanwhile, the domestic market conditions are mixed but generally favorable. Production of steels for building and construction will be delayed due to shortages of labor and machining ability. And, improvement of supply and demand conditions in flat products is expected to require more time due to an excess inventory and a flood of exported materials. However, we expect that the supply and demand improve rapidly in the latter half of this year due to manufacturers’ reduction in production in summer and a recovery in demand at the start of autumn. So, we have decided to keep all the products at the current prices during the month of August. We will continue the production system that meets the demand to balance supply and demand.”
Tokyo Steel’s Price list for steel building materials (Japanese version only)
Tokyo Steel’s Price list for steel plates and coils (Japanese version only)

The prices for August are as follows. H beams at JPY77,000/t, heavy plates at JPY73,000/t, reinforcing bars at JPY63,000/t, hot-rolled coils at JPY65,000/t, hot-dip galvanized coils at JPY89,000/t, checkered coils at JPY66,000/t and pickled and oiled sheets at JPY72,000/t.

The company’s monthly production will be 155,000 tons in July and in August; 90,000 tons of H beams, 40,000 tons of heavy plates and nearly 8,000 tons of exports.
The production is a little lower compared to previous years, but “the company will keep production system that meets the demand”, Managing Director Imamura said.
Also, according to him, “the company’s export price of hot-rolled coils is at $380-430/t and that of H beams is at $500-520/t.” In terms of Asian market prices, the export price of hot-rolled coil seems to be a little expensive, but he said that it is higher than that of Chinese products because the company’s hot-rolled coils are not generic products.”

Managing Director, Imamura explained repeatedly at the press conference that “there are demands in construction but at the same time there are shortages in labor and machining ability.”
In particular, the economy had fallen into depression after the bankruptcy of Lehman Brothers in 2008 and the do-nothing Democratic Party of Japan had worsened further Japan’s economic situations at the same time. As reduction of personnel, reduced manufacturing and plant closure had flourished, manufacturers can’t respond the demands that have suddenly increased.
As to the lack of labor, there are shortages not only in workers at the site, but also in designers and architects.
While the company has not taken measures increasing workers and plants to meet the demands, demand has continued slowly. Managing Director, Imamura said, “Personally, I think the current situation is good. Demands for steel will continue moderately after 2020. Demand should be sustainable, not instantaneous.”

In that way, it is natural that the current demand environment and production system that meets the demand will continue in the 3rd and 4th quarters.

Scrap prices reached major bottom

Also, he commented about scrap prices, “Previously, products price fell along with the drops in scrap prices. Currently, however, they don’t move in such a way.”
“Scrap prices have dropped by JPY3,000-4,000/t since the end of June, back to the price level before the long holidays in early May. But, they will not drop sharply. Obviously, they are on downward trend as demands for scraps are weak in summer due to reduction in production in electric furnace manufacturers, but they may have reached major bottom.”

At last, as to the Olympic-related special demand, “Rather, more tourists have visited Japan due to the depreciation of the yen and new businesses for the tourists have been developed. Commercial facilities including hotels will be built increasingly. We expect the demand in equipment and building related to the new businesses.”

(Edited by Sasaki)

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