Japan: Nippon Steel lifts H-beam prices by $34/t

The wave of steel price increases in Japan continues, with Nippon Steel announcing on Wednesday that it was raising its H-beam prices for January sales (February roll) by Yen 5,000/tonne ($34/t), the integrated mill's first increase in ten months.

So far this week, mini-mills Tokyo Steel Manufacturing and Kyoei Steel have announced raises to selected products for February contracts, as Mysteel Global reported, while also on Wednesday, Japan's third-largest integrated steelmaker Kobe Steel surprised market watchers by announcing that it was lifting its domestic prices of steel bars and wire rods by Yen 20,000/t from April shipments.

In each case, the mills have cited rising costs of raw materials, labour and logistics to argue their case for rises, and Nippon Steel was no exception.

"(Amid) the current situation of various costs that are rising and staying high, we will revise the price revision by Yen 5,000/t compared to the previous month for distributor sales, as distributors have been relatively slow to revise prices," the company said in a statement. "The price of steel scrap as a raw material is overshadowed by the weak yen (and) in addition, energy costs are expected to rise significantly, mainly electricity charges," it said.

Nippon Steel's reference to scrap prices is an amusing distraction, given that the company is primarily a maker of rolled H-beams formed from blooms made of converter steel from a blast furnace where minimal amounts of scrap are required.

However, the company does offer welded H-beams where the input materials are hot rolled coils and heavy plates and here too, its production costs have been rising. On Tuesday-as a precursor to its H-beam raise the following day-it had announced that was raising domestic prices of steel plates for February for distributors and construction projects by Yen 5,000/t, because of "soaring prices of raw materials for blast furnaces and a rise in costs of energy."

The problem of rising input costs is probably the only leverage Nippon Steel has to persuade dealers and general contractors to pay more for its beams because the market for construction steel continues to struggle.

"Orders for new (building) projects such as logistics warehouses, data centers, and factories for making semiconductors continue to be issued (but) it will be difficult to resolve bottlenecks such as the labour shortages at an early stage," Nippon Steel admitted. "For the coming fiscal year, we expect (construction sector) supply and demand to improve, so we are not pessimistic," it maintained.

Indeed, on the same day it announced its H-beam price hike, Nippon Steel also released data relating to H-beam stocks held by its Tokiwakai grouping of domestic H-beam dealers which showed that at the end pf December, its network of dealers nationwide held 202,300 tonnes of H-beams, higher by 10,800 tonnes or 5.7% from end-November and topping the 200,000 tonnes-level for the first time in 21 months.

The company said dealer stocks had risen because of the fewer number of business days in December as Japanese building companies and distributors stopped work early for Japan's Oshogatsu new year holiday. "We believe that inventories are within an appropriate range, but we will keep a close eye on future developments," Nippon Steel said.

Nippon Steel never reveals its prices but this week, deals for SS400 grade 5.5/8 x 200x100mm H-beams in Tokyo are being negotiated at Yen 123,000-124,000/t and those in Osaka at Yen 122,000-123,000/t, unchanged on month.

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