According to Nippon Steel Corporation, Japan's Tokiwakai group of domestic steel distributors held in stock a total of 206,300 tonnes of H beams across the nation at the end of July 2011, down by 9,100 tonnes or 4.2% MoM, when the nationwide H beam inventory ratios averaged 2.39%, down from 2.73 MoM. The Tokiwakai group is concerned with domestic distribution of steel products from the nation's largest integrated steelmaker.

As a result, Tokiwakai's H beam stocks decreased for the first time in seven months. In the breakdown by main trading areas, Tokyo accounted for 45,900 tonnes, down 2,600 tonnes or 5.4% MoM; Osaka 52,800 tonnes, down by 5,500 tonnes or 9% MoM and Nagoya 23,000 tonnes, down by 600 tonnes or 2.5% MoM.

Tokiwakai saw a further reduction in H-beam inflows into stock as NSC had reduced its H beam order intakes besides an enhanced cutback in its H beam production. On the other hand, the group succeeded in a further diminution of its H beam inventory thanks to increased deals in small lots that related to seismic retrofitting and construction of store buildings.

The way NSC sees it, though, an average 2.39% of the nationwide H beam inventory ratios still represents a somewhat high level, given that an appropriate inventory level should equal two months of shipments or at a level of around 170,000 tonnes per month. As a result, the company is poised to continue its H beam production cutback and order intake reduction toward the formation of an appropriate market environment for H beams.

Meanwhile, new items of construction will gradually take shape between the autumn of this year and the beginning of fiscal 2012 in relation to urban renewal projects in the Metropolis of Tokyo and construction of large scale distribution centers in the Kanto area, according to NSC. Also, the company points out cases of repairs for the existing factories and facilities besides work relating to schools during the summer holidays. But the company admits fears of negative factors such as a voluntary freeze on construction after the application for a building confirmation and a deferral of the construction start due to a review of the design.

Therefore, the company is calling the attention of various steel distributors to taking prudent approaches. Under the existing circumstances, NSC is contemplating rejecting any new H beam orders until market conditions enable the company to sustain its H-beam business.

(Sourced from TEX Report Limited)