By the end of October, stocks of carbon steel hot-rolled, cold-rolled and coated coils and sheets at Japan’s steel producers, coil centers and distributors declined to a new low since April 2010, down 2.9% or 108,000 tonnes on month to about 3.56 million tonnes, according to the latest data released by Nippon Steel on December 2, indicating that Japan’s supply of carbon steel flats have been tightening, according to market sources.
Carbon steel stocks tend to decline on month in October in Japan, which had been the case for the past decade or also at an average of 48,000 tonnes on month, Mysteel Global calculated from the Nippon Steel data, but the decline in October 2020 had been more substantial, mainly on much better demand from the end-users than the previous years, according to market sources.
“Demand from the domestic auto sector has already returned to the previous year’s level (before the pandemic), and consumption from the home appliances makers have been on the rise too, resulting in steady deliveries but our output has been recovering slowly and gradually in comparison, hence the drops in our stocks,” a Nippon Steel official explained.
Japan’s production of carbon steel HRCs and CRCs both rose by 11.3% on month to 2.96 million tonnes and 1.24 million tonnes respectively for October and galvanized sheet output increased by 20% on month to 743,800 tonnes, as reported, which, however, failed to catch up with the rises in demand.
Japan’s carbon steel flats stocks at the end of Oct
| By Ownership | Volume (‘000 tonnes) | M-o-M |
| Producers | 1,667 | +1% |
| Coil Centers | 1,203 | -6.2% |
| Distributors | 688 | -5.8% |
| By Product | Volume (‘000 tonnes) | M-o-M |
| HRC | 1,691 | -2% |
| Coated | 1,047 | -4.9% |
| CRC | 819 | -2.2% |
Source: Nippon Steel
A Tokyo-based flat steel trader also noted the robust demand for carbon steel flats from the auto sector. “Coil centers with long-time business relationships with the auto-related customers have been kept busy and their stocks declined the fastest, and this phenomenon will probably continue into the coming months,” he predicted.
The capacity utilization rate at the core steel coil centers across Japan averaged 75.5% in October as against the 69.9% in September, according to the latest data from Zenkoku Coil Center Kogyoukai, an alliance of 96 coil centers in Japan.
A second Tokyo steel trader agreed, adding that that even projected higher flat steel production in the next few months with the restarts of blast furnaces in November may not be led to higher stocks, as “auto-related customers will immediately digest any additional output that will be put into the market,” he added.
Nippon Steel has reignited its relined furnace at Muroran Works in Hokkaido on November 22 and restarted a banked furnace at Kimitsu area of East Nippon Works on November 24, and both are now operating as per normal, according to the Nippon Steel official.
“It usually takes about a month for blast furnaces to return to normal operations after the reignition, but these two took just about five days with our new technologies and they will soon increase our supplies to the customers,” he added.
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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