Japan’s domestic rebar prices are expected to rise further as producers may raise their list prices with the recent surge in scrap prices, and Japanese distributors are also seen pushing through the previous price hikes by producers aggressively, sources shared on Monday.
As of February 14, SD295A 16-25mm rebars are being transacted at Yen 96,000-98,000/tonne ($832-849/t) in Tokyo, up Yen 1,000/t on month, while H2 grade scrap paid by mini-mills around Tokyo were at Yen 53,500-54,500/t, up Yen 2,000-2,500/t on week, and some were paying even higher at above Yen 55,000/t, according to market sources.
A Tokyo-based distributor shared that inquiries from buyers have been stagnated due to the slower progress of construction projects in winter and also to the fact that most end-users had already secured materials to fulfill their immediate needs for the current quarter when rebar producers had lifted their prices rapidly.
“But scrap prices are expected to rise further and producers will shift such increments to their product prices. So distributors really need to digest the previous hikes by producers prompter and to prepare for the further hikes by producers,” he said.
On Monday, Tokyo Steel Manufacturing, Japan’s leading electric-arc-furnace producer, has decided to lift its scrap buying prices by Yen 1,000-2,000/tonne effective from Tuesday arrivals for all grades.
Tokyo Steel’s H2 buying price at its four works across Japan now stands at Yen 57,000/t and that at the steel center in Shikoku Island at Yen 55,000/t, according to the company.
“We are certain that other mini-mills will follow the price trend, so scrap prices are expected to rise further,” a scrap trader in Tokyo observed.
Many Japanese mini-mills have already started considering or preparing for their next product price hike. Kyoei Steel, Japan’s largest rebar producer, for example, has decided to stop offering rebars produced at its Yamaguchi works in western Japan since February 14 to monitor the scrap price movement and to review and decide adequate product prices. The company plans to resume its rebar offerings from February 21.
“Stop offering is our very message that we can’t sell our products at any lower prices or even at the current list prices. We hope that our buyers will understand this and agree on higher prices when we resume offerings,” a Kyoei official emphasized.
He added that the company had been tabling its rebar list prices at Yen 98,000/t, though the actual transaction has yet to reach to its list prices.
“But considering the recent surge in scrap prices and other input costs such as energy costs in the new fiscal year (from April) to grow further, we will have to target around Yen 103,000/t at the minimum,” the Kyoei official said.
He also noted that scrap prices in Yamaguchi and Kyushu have been higher than those in other areas, and as of Monday, the H2 scrap price in the two areas was at around Yen 56,000-57,000/t, or having reached the highest since 2008.
“However, rebar prices are comparatively lower than other steel products by EAF mills, so rebar producers are in dire need to lift their prices,” the official added.
Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an exchange agreement between MySteel Global and SteelMint.
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