Reinforcing rebar prices in Japan’s Kansai region have been increasing for some time following a consistent rise in ferrous scrap prices. Worries of a further increase in prices have sparked among the rebar manufacturers on the back of continuously rising scrap prices.
The H2 scrap purchase prices of electric-arc furnace (EAF) manufacturers in the Kansai area have increased by JPY 2,000/t ($18) to JPY 53,000/t ($473), as per latest reports.
Current trade prices of rebars in the Japanese domestic market are in the range of JPY 80,000/t ($714), JPY 90,000/t ($803). While JPY 90,000/t ($803) is hard to digest, ferrous scrap prices are strengthening again which along with high electricity and ferro alloy production costs, are putting pressure on rebar manufacturers. Further, rebar prices are set to hit JPY 93,000-95,000/t ($830-848) levels in the near term as scrap prices are expected to continue to rise.
Meanwhile, on the demand side, the market is sluggish as buying interest for the product is low.
The large-scale construction projects in Japan have either been delayed or are on hold due to the Covid-19 pandemic. Even, supply of the base metal, hot-rolled coils (HRCs), is tight and the same is the case with H-shaped steel products.
On the other hand, demand for steel bars used in small and medium-sized construction projects such as condominiums and hotels, is limited which is pushing down demand for reinforcing bars as well. The current scenario is that both supply and demand of rebar are tight.
In terms of distribution, traders are quoting fixed prices which is lowering the profitability in rebar sales. Market participants, however, believe that rebar sellers will be aggressive in sales in the near term due to decreasing profitability.
Thus, it will be interesting to see which way Japan’s rebar prices will move.
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