Tokyo Steel Manufacturing Company Limited, Japan’s leading electric-arc furnace (EAF)-route steel manufacturer, lifted steel plates and long steel prices for Aug ’21 sales. However, it has rolled over prices for other carbon flat steel products.
Current prices:
- Heavy plates prices are up by JPY 5,000/t ($45/t)
- Prices of H-shaped beams stand at JPY 106,000/t, up by JPY 3,000/t ($27/t)
- Prices of steel bars including rebar stand at JPY 86,000/t, up JPY 3,000/t ($27/t)
SteelMint analyses a few factors that drove up prices
1. Increase in crude steel output on demand recovery: The nation’s crude steel output is expected to increase by 30% in the Jul-Sept ’21 quarter as demand is picking up post the pandemic, according to the Ministry of Economy, Trade and Industry (METI). Robust demand from industries such as machinery and automobile propelled mills to increase production.
2. Improved domestic consumption: Steel demand from the auto sector is poised to grow by 7.9% y-o-y in Jul-Sept ’21 (and by 11.9% in Apr-Jun ’21) to 2.57 million tonnes (mn t), according to a recent data released by METI.
Meanwhile, ship-builders are also expected to consume about 649,000 tonnes of finished carbon steel in Jul-Sept ’21. However, volumes would be down by 12.2% y-o-y and by 0.8% on a quarterly basis.
Also, Japan’s carbon steel exports in May ’21 had hit a 13-month high at 1.79 mn t, up 9.5% y-o-y and by 4.1% m-o-m, as per the Japan Iron and Steel Federation (JISF).
3. Increase in Chinese HRC prices: As of the current week (Week 29), Chinese HRC export offers have moved up to $930-950/t FoB basis against the previous week’s $920-940/t FoB.
The government’s clear focus on attaining carbon neutrality by 2030 has led to increased restraints on steel and allied industrial activities. This will reduce output in the upcoming months. Also, China’s steel exports may see a drop due to the expected demand-supply gap alongside the removal of the export rebate @13% in May ’21 and impending announcement of an export tax by the Chinese government. This, in turn, has led to a shift in interest in steel products manufactured by countries other than China.
Outlook
Prices in the upcoming months are expected to increase due to a boost in infrastructure development in the country along with strong overseas demand. “Overseas steel markets have been strong, especially in the United States and Europe, and prices are expected to remain solid due to robust demand and higher prices of raw materials,” Tokyo Steel said in a statement.
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