Japanese rebar prices to rebound on improved demand

By September 7, Japan's rebar prices had been declining, to reflect weakened scrap prices from mid-August after the prices had been on the uptrend since spring 2020. But as scrap prices have rebounded, market participants believed the drop was just temporary and rebar prices will start rising soon.

As of Wednesday evening, deals for SD295A 16-25mm rebars in Tokyo were transacted at Yen 118,000-120,000/tonne ($819-833/t), down Yen 3,000/t after having stayed flat since end-April, sources shared.

A Tokyo-based distributor said that some suppliers had agreed on lower prices to secure sales volume because buyers strongly claimed the decline in scrap prices during previous months.

"And the cut by Tokyo Steel Manufacturing for rebar prices weakened market sentiment. Though its rebar supply is mainly for western Japan (instead of Tokyo) and the volume is rather limited, it had made buyers become aggressive for lower prices," he added.

Tokyo Steel announced to cut Yen 5,000/t for its rebar prices for September sales on August 22, and its base-sized rebar prices had become Yen 97,000/t, as reported.

Most rebar suppliers have been trying to keep their prices unchanged, as rebar producers are rolling over their list prices, though they claim the rise in other production costs.

"But scrap prices have been rising since mid-August, and Japanese Yen has weakened further at a faster pace recently, so production costs for rebar producers will become high, and they will have to adjust their prices higher," the distributor predicted.

Weaker Yen will drive prices of imported materials (such as auxiliary materials and alloy) higher, and power charges and distribution fees will also become higher on weaker Yen, because Japan relies on imported crude oil and gas, Mysteel Global notes.

On September 7, Japanese Yen against the U.S. dollar dropped to around Yen 144 to hit the lowest level in 24 years.

A procurement official from a rebar producer in western Japan expected demand for rebar to rise in October-March period, and producers will try to keep adequate profit margins to maintain stable product supply.

"We have no plan to cut our product prices and will probably lift prices soon, so the drop in rebar prices is believed to be just temporary. And nobody in the market would agree on any lower prices," he emphasized.

Written by Yoko Manabe, yoko.manabe@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.