Japan coil-center sales rise in Nov on higher auto output

Steel-sheet product sales among coil centers across Japan in November rose 10.9% on month to 1.27 million tonnes, according to the latest data by industry grouping the Zenkoku Coil Center Kogyo-kai (ZCCK). Market sources attributed the rise to higher operation rates at the domestic auto sector.

November sales among the 92 coil centers across Japan was down 0.2% on year, but a sales official from a coil center in central Japan believed that it means the operation among Japanese coil centers has mostly returned to normal.

The operation rate of coil centers across Japan in November averaged 76.5%, higher from 68.2% in October, and that in Tokai region of central Japan increased to 80.5% in November, from 62.1% in October, the ZCCK data showed.

The sales official explained that Tokai region is home to many auto-related processors and vendors as Toyota's headquarters plant is located in the area. "Thus, the higher sales volume in November was mainly because Toyota had been ramping up its operation since November," he added.

The operation rate at coil centers in Tokai bottomed at 60.4% in August while the recent peak was seen in March at 85.7%, according to the data. "We expect the operation rate to grow in the coming months with the anticipated higher vehicle output by Toyota, and coil centers in other areas that have more auto-related customers may also lift their operations," the sales official predicted.

A flat steel trader in Tokyo expressed his concern about the rise in stocks held by coil centers. "The impacts from slower steel consumption by the auto sector in the past months still remain, while the softening supply tightness will continue to slow down the price increment for flat products," he said.

Stocks held by the ZCCK members totalled 1.58 million tonnes at the end of November, up 3.3% on month and 12.8% higher on year.

As of January 7, the SS400 grade 1.6mm thick hot-rolled cut sheet (1,219×2,438mm) were transacted at Yen 125,000-127,000/tonne ($1,084-1,101/t) in the spot market in Tokyo, and those for SPCC grade cold-rolled cut sheet (914×1,829mm) at Yen 140,000-142,000/t, both unchanged on month but higher by Yen 2,000/t and Yen 1,000/t respectively from two months ago, market sources confirmed.

The trader added that market prices need to be increased by another Yen 12,000-22,000/t to digest the previous hikes by producers. "Distributors have to prioritize on prices and to wait for the flat supply to become tighter in the spot market," he said.

Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.