By July 11, Japanese rebar prices had remained unchanged for over two months, balanced between declining scrap prices and the producers’ strong determination to defend their prices, Mysteel Global has learned. But despite the makers’ best hopes, sales have been sluggish, and market sources warn that there’s a risk rebar prices will start weakening.
As of Monday morning, deals for S295A 16-25mm rebars in Tokyo were transacted at Yen 121,000-123,000/tonne ($883-898/t), unchanged since late April after they’d jumped by about Yen 25,000/t from January, according to sources.
A Tokyo-based distributor said that rebar inquiries have increased after rebar producers started announcing upward adjustments to their ‘quality extra charges’ for June or July sales. “We’d expected that rebar prices would generally start increasing at last – but they have not!’ he said. “Those for some grades have increased but not others,” he remarked.
Prices for SD345 rebars have risen by Yen 2,000/t on month, he noted, pointing out that the increment had mirrored the producers’ adjustment for quality extras to reflect the higher-priced alloys contained. SD354 structural bars, used for construction and wire drawing, contain traces of manganese and phosphorous, Mysteel Global notes.
A second distributor in Tokyo observed that most rebar buyers have completed securing rebars for their needs until the end of summer, so they are not in a hurry to place new orders. “And as scrap prices are continuing to decline, this is also keeping buyers stepping back from procuring,” he added.
Japan’s domestic scrap prices started declining since early May and have fallen by about Yen 18,000/t in total, so rebar buyers have realized the drop has become larger than the increment earlier this year of about Yen 15,000/t, the distributor also noted. “Rebar producers have been claiming that production costs (other than scrap) have been rising, but buyers believe the larger decline in the scrap price could cover the rise in other production costs,” he noted. “The buyers reckon the mills will not be able to lift prices further, but may be able to even cut prices,” he explained.
A distributor in Osaka said that dealer prices of rebars there have declined by Yen 1,000/t since early June because some dealers had accepted lower bids – just to win sales. “And actual sales have been thinner, and we are afraid more distributors will receive low priced orders,” he observed, warning that this may influence market conditions in other areas including Tokyo, Japan’s largest rebar consuming market.
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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