Japan's rebar demand to fall 44-year low in FY20

Japan's domestic rebar demand in the fiscal 2020 (April 2020-March 2021) is expected to decline further by 6.8% on year to around 6.8 million tonnes, according to the forecast released by Japan's Non-Integrated Steel Producers' Association on July 13, which will be a new low since FY1976 when the association commenced release the forecast, according to an official from the organization.

Among the total, demand from building construction is estimated at 5.05 million tonnes, down 5.4% on year, that from civil engineering to fall 14% on year to 1.14 million tonnes, and the other sectors down 4.5% on year to 628,000 tonnes, the official shared.

The forecast is based on the orders data from the Japan Iron & Steel Federation (JISF) and newly-launched building starts data from Japan's Ministry of Land, Infrastructure, Transport and Tourism (MLIT), as well as taken into consideration of the existing factors such as impact of the COVID-19 outbreak, he explained.

"Even without the pandemic, the country's demand for rebar has already been shrinking," he explained, adding that the forecast does not factor in the possible second or third wave of the virus attack.

A director from a rebar producer in Tokyo agreed on the forecast, noting that many of large construction projects including those redevelopment projects across Japan had been rushed to the completion by the end of calendar year 2019 for the hosting of the 2020 Tokyo Olympics in July 2020, so construction has been slowing down since last autumn and the pace of the new project launches have decelerated too.

"Some construction projects originally planned to commence after the Tokyo Olympicshave been brought forward, as the Olympic Games has been postponed to 2021, but the rebar consumption volume is the same, no increases," he said.

Besides, Japan's newly-launched reinforced concrete building project, which consume more rebar, have been down on year since November 2019, and such new project over April-May added up to 3.82 million square meters, down 6.9% on year, according to the latest data by MLIT.

A sales official from a second rebar producer in Tokyo predicted that less domestic rebar consumption may force some producers to actively export their billets instead of rebar, as Japan's rebar exportsare only about 3-4% of the total output.

"It may be hard for producers to export finished products and it may hold greater pricing risks, but billet exports can be easier and less riskier too," he explained.

The trend seemed to have emerged, as in May, Japan exported 110,756 tonnes of billet, up 39.7% on year but down 3.2% on month, as reported.

On the other hand, the Japanese steel mills have been cutting down on rebar production, as the country's small bar production, most believed to be rebars, totaled 3.14 million tonnes over January-May, down 11.2% on year, according to the latest data from JISF.

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

Photo Credit - JFE Steel