Kyoei Steel sticks to 'minimum' rebar price for September

Announcing its domestic sales policy for September on Wednesday, Kyoei Steel, Japan's largest rebar producer, declared that it will continue to strictly enforce a minimum price of Yen 115,000/tonne ($723/t) for base-size bars, a level unchanged since May.

"The domestic market continues to experience weak demand and sluggish movement, and product prices have still not reached an appropriate level," it said in its price policy statement. "On the other hand, orders, mainly for large-scale investment projects such as data centers, are continuing, creating an environment where there is some expectation for demand from autumn onward," it said.

Citing rising costs for electricity, distribution and others, Kyoei said the profit environment surrounding manufacturers is likely to become even tougher.

"In light of this situation, we will also ensure that sales in September adhere to the minimum price of Yen 115,000/tonne and work to form a market that allows for reproducible production," it said.

Kyoei's reference to expected improved market conditions from autumn is noteworthy as the Japanese mills seem to be pinning their hopes on demand during the autumn months of October-December picking up as usual. Nippon Steel had made similar comments last Thursday when announcing a roll-over of its H-beam prices, as did Tokyo Steel Manufacturing when tabling its September prices on August 18, as Mysteel Global reported.

Kishiwada Steel, an Osaka-based rebar maker like Kyoei, announced on Tuesday that it too would continue observing its minimum price for rebars in September, though its floor price for base-sized bars is Yen 105,000/t. 

"In addition to persistently high iron scrap prices, various costs such as electricity, ferroalloys, electrodes, and transportation continue to rise," Kishiwada said. "Therefore, the company will continue to work on further price improvements to secure profitability."

The difference in "minimum" prices that the two Osaka mills continue to defend relates to geographic spread. Kishiwada has only one works and serves the Osaka-Kobe-Sakai region, while Kyoei operates four plants nationwide and its price announcement covers all.

This week, steel distributors and building contractors in Osaka – Kishiwada's home market – are generally paying Yen 103,000-105,000/t for 16-25 mm diameter SD295 rebar, as assessed by industry daily Tekko Shimbun, while those in Tokyo are paying Yen 115,000-117,000/t, the market served by the Kyoei Steel Kanto Division in Ibaragi, north of Tokyo. Both the Osaka and Tokyo prices are unchanged on month.

But whether autumn orders provide the fillip the mills have been hoping for remains unclear. In a commentary, Tekko Shimbun observed that overall construction steel demand is expected to rise during the October-March half of the present fiscal year, centered on large-scale projects such as redevelopment in major metropolitan areas and semiconductor factories.

"But on the other hand, construction of small and medium-sized properties, which are directly linked to retail steel sales, show no signs of improvement due to labour shortages in design and construction and rising construction costs," it declared. "We hope that small and medium-sized properties, which have been watching this situation (where construction costs continue rising), will give up waiting and start making moves."

Preliminary data from the Japan Iron & Steel Association last Friday put Japan's nationwide production of small bars (mostly rebars) during July at 484,700 tonnes, down 9.9% from July last year – the second on-year monthly fall – and lower by 7.3% from June. The July output was also the lowest since February's 454,000 tonnes.

Source:Mysteel Global