Japan: Tokyo Steel rolls over carbon steel prices for Jul ’21 deliveries

Tokyo Steel Manufacturing Company Limited, Japan’s leading electric-arc furnace(EAF)-route steel producer, rolled-over prices of all its finished carbon steel products for Jul ’21 in domestic sales to let the market absorb its previous hikes.

Effective price of HRC stands at JPY 1,10,000/t($999). Last month, the manufacturer had increased prices by JPY 16,000-18,000/tonne($91-165/t) for Jun ’21 deliveries.

However, the company raised plates prices by JPY 5,000/t($45) on improved demand amidst supply shortage.

• Declining Chinese steel prices:Chinese HRC (SS400) prices have been slashed by $140-145/t to $940-950/t FoB China in mid-Jun ’21 against $1,055/t FoB at the beginning of May ’21.This is on account of low buying interest in the overseas market with continued uncertainty over export tariffs on steel products.
• Hike in Japanese scrap export prices:Japan’s leading EAF mill, Tokyo Steel; hiked its domestic scrap purchase prices during mid-May ’21.The company increased prices by JPY 1,500/t ($14) for all five works. After revision, the company would pay a bid price for H2 scrap at JPY 51,500/t($473) for Tahara and JPY 48,000/t($440) for Utsunomiya works.
• Tight supply:The global supply and demand fundamentals have tightened further owing to limited supply of HRCs from Japanese mills. This is partly due to scheduled maintenance at a hot strip mill facility in Japan in September, which may reduce production volumes for August and September shipment cargoes.
• Demand from construction industry to improve:Demand from the construction sector is expected to stabilise and register an annual average growth of 1.2% between 2021-2024, supported by investments in the transportation, renewable energy, telecommunication, and manufacturing sectors. Lower construction activities in the past couple of months amid the re-emergence of Covid cases in Japan may gain momentum as concerns have now started to subside.

Outlook-

Japanese steel producers are expecting brisk orders from downstream buyers due to the strong demand in China, which has led to price stability after the recent volatility.

It is anticipated that the Japanese steel makers will most likely hike their offers for August-shipments for HRCs amid tight supply and surge in raw material prices.