Japan's construction steel demand to stay firm till mid-2022

The latest Japanese construction-related data suggest the demand of construction steel may stay firm until mid-2022, though the country's construction steel prices may rise at a slower pace due to the weakening scrap prices, according to market sources.

The statistics released by Japan's Ministry of Land, Infrastructure, Transport and Tourism (MLIT) at the end of December showed that newly-launched building projects nationwide including housing and non-housing totaled 10.13 million sq meter in November, up 8% on year but down 16.3 on month.

Among the total, non-timber buildings grew for the second month by 12.5% to 5.45 million sq m. with steel-framed buildings accounting for 3.46 million sq m, up 15.4% on year, and reinforced concrete buildings totaling 1.75 million sq m, up 16.3% on year, according to MLIT data.

Steel-framed buildings consume more beams and sections while reinforced concrete buildings consume more rebars, Mysteel Global understands.

A construction steel trader in Tokyo attributed the on-month decline in November to a larger number of newly-launched building projects in October with Japan lifting its nationwide state of emergency to contain the spread of COVID-19 at the end of September.

"The number of new non-timber buildings has been up on year since April except for August and September - the two months during Japan's state of emergency, and that for new steel-framed buildings has been up on year since January 2021. So the overall demand for construction steel will stay firm, especially for beams and sections," the trader said.

However, a steel distributor in Tokyo believed that actual sales of construction steel are not as good as expected, as customers are holding off buying on the anticipation of falling steel prices due to the weakening scrap prices.

"As scrap prices are still relatively high and scrap producers are defending their prices strongly, buyers may wait until the last minute though they will have to agree on higher prices eventually," he said.

As of January 5, SS400 grade 200x100mm H-beams were transacted at Yen 110,000-111,000/tonne ($947-955/t), and SD295A 16-25mm rebar at Yen 95,000-97,000/t, both in Tokyo and both unchanged on month though they were up Yen 29,000-30,000/t and Yen 17,000-18,000/t on year respectively, sources confirmed.

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

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