Japan's Kyoei raises rebar base price by $17/t m-o-m for Dec'21

For December domestic sales, Kyoei Steel, Japan's largest rebar producer, has decided to lift its rebar base price by Yen 2,000/tonne ($17/t) on month to Yen 98,000/t for all its four plants across Japan mainly to reflect higher input costs, the company announced on November 24.

Kyoei, a mini-mill based in Osaka of western Japan, thus, has lifted its rebar base prices three months in a roll by a total of Yen 8,000/t after having kept the prices unchanged over June-September for the market to digest earlier price hikes, Mysteel Global notes.

"Scrap prices have softened moderately in recent weeks, but it is still rather high, and other input costs such as alloy, energy, delivery and auxiliary materials are rising, so we are already targeting Yen 100,000/t for our rebar sales," a Kyoei official warned.

As of November 24, Kyoei's Hirakata plant in Osaka is paying Yen 55,500/t for H2 grade scrap, down Yen 1,000/t from the end of October, about Yen 25,000/t higher on year, according to sources shared.

The Kyoei official admitted that previous rebar price rises had not been fully digested and the price varies by region in Japan.

"Some customers have complained of too rapid rises in our rebar price, but most of Japanese electric-arc-furnace (EAF) steel producers, like us, are facing higher production costs in general, so our December pricing policy is to tell the customers that we can't afford to cut rebar price just because of lower scrap price, we have to raise it," he emphasized.

A Tokyo-based construction steel trader confirmed the struggles of the Japanese EAF mills, adding that they are also exposed to potential production disruption with possible power rationing in the coming winter because of power supply shortage in Japan, as many Japanese EAF mills have signed pre-agreements with power houses to reduce power consumption whenever necessary in exchange for some discounts in power charges.

"Actual steel production may not reduce much because of this, but it will be costly for EAFs to be reheated to the scrap melting temperature after halted for a couple of hours, and mills are probably bracing themselves for the added cost from this too," he explained.

Some mills, for example, have agreed to stop three hours of power consumption for 20 days/year when needed, he added.

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

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