Tokyo Steel Manufacturing, Japan’s leading electric-arc furnace steel producer, has decided to halt receiving any new steel orders starting December 14, taking the time to assess the market situation because of the rapid changes lately, a company’s managing director confirmed on December 15.
The company will not sell to any customers either domestic and overseas, as recently the prices especially of scrap and global steel have been surging too much, and “we have no idea what will be the appropriate prices for January deliveries, and we have been trying to figure out where the market will go in the near term,” the director explained.
Besides, Tokyo Steel should release its list prices for January sales on December 21, and any new orders signed prior to the day will still refer to December list prices that was released on November 16 when the prices have been way below the present market levels, he added.
Since November 16, Tokyo Steel raised its steel prices from different works by Yen 4,500-9,500/t ($43-91/t) to reflect varied steel scrap procurement prices, but since then margins have been shrinking on the faster growths in scrap prices, so the one-week suspension in sales will “avoid us from selling more at lower prices,” the official said.
A Tokyo-based distributor interpreted the latest move by Tokyo Steel as a clear message to the end-users that the Japanese steel mills will have to raise their January sales prices and by a large degree too.
“We have witnessed the sharp and consistent rise in the scrap price, so the producers shouldn’t be blamed, but it will be a headache to us how to transfer the extra costs to the buyers, as we have not even been able to fully transfer the prices rises in the previous months yet,” he warned.
Tokyo Steel’s Tahara plant, a key production base for flat steel, for example, saw its H2 grade scrap buying prices up Yen 9,500/t since November 16 to Yen 39,000/t as of December 14, while its list price for SPHC grade 1.7-22mm hot-rolled coil price was Yen 69,000/t, Mysteel Global understood from the company.
Most probably the company will have to raise steel prices further in January, as the overall uptrend in the steel prices may continue in line with the ever-rising raw material prices, according to the official.
“China’s bullish steel demand will probably support the global steelmaking raw material prices up further, and for us, we are not only just to assess the price trend, but also need to work out how to secure adequate margins,” he predicted.
Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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