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Supply-Demand Balance of Specialty Steel Tightened Further
According to a source, the balance of domestic supply-demand of specialty steel bars and wire rods has further been tightened in Japan.

Domestic blast furnace mills and electric furnace mills of specialty steel bars and wire rods have continued an operation at full capacity and have adjusted a delivery time almost to the limit as with the tight balance of supply-demand of the previous time. It is in a state for them to come close to an stage where they are forced to adjust the receipt of orders.

Demand for specialty steel products mainly for the automotive industry has reached the very high level to exceed that before the Lehman's fall. The main factors of it are mentioned that production of assembled vehicles is favorable, that of KD is also rising and the high level in demand for trucks and construction machinery continues. In addition, a remarkable rise in export of parts and a change in local procurement have underpinned brisk demand of this time.

Furthermore, under the current foreign exchange rate, such cases are appearing that total costs of Japanese parts including additional processes being necessary for an improvement in a yield ratio and the quality management are superior to overseas ones and cases to return to Japanese products among a part of parts from overseas products are appearing.

The Japanese specialty steel makers have attained response to such situation by reducing the inventory level to the limit, addressing partly an adjustment of the receipt of orders and so on. However, such situation is seen to be structural caused by above factors, and it will be major challenges in future to secure a flexible production capacity including a renewal of aged equipment and facilities.

Amid such environment of supply-demand, self-sufficient price negotiations are going to start with a revision in prices of supplying products for the latter half of the fiscal year 2017 by car manufacturers, and earnings bases of the specialty steel makers have structurally been worsened due to a fall in their self-sufficient prices more than fluctuations in costs and a price hike of ferroalloy such as manganese and chromium alloy. Under the situation where an increase in investment costs to renew aged equipment and facilities to secure the flexible production capacity towards the stable supply, they are thought to seek an understanding of customers in consideration of being imperative to improve margins.
last modified : Mon 13 Nov, 2017 [10:35]
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