Japan: Nippon Steel holds domestic H-beam prices again

Despite signs that H-beam prices in Tokyo, Japan's largest construction-steel market, are firming, Nippon Steel is keeping the domestic prices of its H-beams for retail sales this month (for July roll) unchanged from May, it announced on June 19. Nippon Steel, which vies for the title of Japan's largest H-beam producer with mini-mill Tokyo Steel Manufacturing, has now kept its beam prices unchanged for six months, Mysteel Global notes.

"There has been no significant change in the demand environment," Nippon Steel acknowledged in a statement, adding that it intends to continue to focus on production to meet actual demand.

Nippon Steel noted that according to the latest Japanese government construction-start statistics, in April the volume of steel used in steel frame construction was 390,000 tonnes, up from 320,000 tonnes in March. "The background to the increase is large-scale construction projects (but) on the other hand, (construction) on small-scale steel projects of less than 2,000 square metres is still at a relatively low level," the company noted.

Wednesday's announcement was really just Nippon Steel announcing publicly what it had already been telling its distributors and customers privately since earlier this month. On Tuesday, Himeji-based sections maker Yamato Kogyo had announced that it would be holding prices of its H-beams for next month's sales unchanged from June, saying that-like Nippon Steel-construction demand is still stagnant and the market environment is not favourable for a price rise in the near term.

The same day, Nippon Steel Group mini-mill and sections maker, Osaka Steel, had said that it too would be holding prices of its shaped steels such as angles unchanged for July. "There are many delays in the progress of construction due to labour shortages, and the impact of structural capacity problems is also significant," the mini-mill noted.

The stagnation of the construction steel market, especially that of H-beams, was also evident in the volume of H-beam stocks held by Nippon Steel's Tokiwakai grouping of domestic H-beam dealers nationwide at end-May which totalled 220,800 tonnes. Though this was only higher by 0.6% from end-April, it marked the first time since May 2019 that the dealers' stocks had topped 220,000 tonnes.

Moreover, inventories held by Tokiwakai dealers in Japan's three major demand regions-Tokyo, Osaka, and Nagoya-increased by 1,900 tonnes or 1.4% as of end-May to 142,400 tonnes, the seventh consecutive monthly rise.

Despite this, Japanese industry daily, Tekko Shimbun, suggests that H-beam prices are showing signs of firming in Tokyo, with deals for SS400 grade 5.5/8 x 200x100mm H-beams now being negotiated at Yen 124,000-125,000/t ($790-796/t) higher by Yen 1,000/t on month.

"While the volume of goods sold has been sluggish, it has been difficult for trading companies and distributors to pass on the increase in labour and logistics costs to prices," the daily said. However, major traders and distributors warn that will be difficult for them to maintain their distribution function if costs cannot be absorbed, Tekko Shimbun noted, suggesting that such firms will "re-enforce price increases" to boost the momentum for passing on their higher costs.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.