TEX quoted Mr Katsutoshi Kurikawa chairman of the Non Integrated Steel Producers' Association as saying that there are expectations for Japan's domestic rebar demand at least within this year or up to March 2012, given that new construction starts at home in the July to September 2011 quarter indicated favorable growth on average.
He pointed out the prospects of rebar demand at the press conference he held November 7th 2011 after he held talks with Fudenko vice chairmen. Fudenko is a principal organization of domestic electric steelmakers putting out ordinary steel products.
Mr Katsutoshi Kurikawa said that "The floor area of new construction starts in September decreased by 14% from a year ago, according to official statistics. But it showed a year on year increase of 5% on average in the July-September quarter. In the breakdown of the floor area by structures, steel-framed ones decreased by 3%, reinforced concrete ones increased by 15% and steel framed/reinforced concrete ones increased by 25%. Besides, there was favorable demand for residential construction starts in the July to September 2011 quarter, which reflects particular demand for such facilities as hospitals, nursing homes, ceremony halls, and condominiums that cater to the baby boom generation."
He added that "As far as rebar go, quantitative demand could be expected at least within this year or up to March 2012 since there is a time lag of around three months from new construction starts to the ensuing consumption of steel products."
Mr Kurikawa said that "Japan's nationwide production of rebar in the July to September 2011 quarter increased by 5.1% from the same quarter of last year, which reflects demand growth in residential construction starts. In contract, nationwide production of H beams in the July September 2011 quarter decreased by 6.9% from the same quarter of last year, which indicates evidence of slack demand for steel framed structures."
He added that "Japan's domestic market conditions for local ferrous scrap have plunged to a level of JPY 20,000 per tonne until now, but a falling domestic market would prove a short term phenomenon. It is an economic principle that what has gone down in price will go up again. As to ferrous scrap in particular, it could be piled up in any large quantities as long as necessary stockyards are available and it never goes rotten. Therefore, ferrous scrap amounts to a commodity whose market is liable to fluctuate violently, in which an advance of JPY 10,000 per tonne could easily happen after a decline of the identical value."
He concluded that "All things considered, Japan's electric steelmakers face the challenge in how to form or maintain prices of their products that will permit reproduction after an accurate understanding of ferrous scrap price trends. In this connection, this year is different from last year because rebar demand is in good shape. Figuratively speaking, the current situation represents the weather is fine but the waves are high."
(Sourced from TEX Report Limited)
