Japan’s rebar makers are being urged to maintain tight control over their production amid concerns about rising stocks.
“Mini-mills need to produce only the volume required to meet demand and so must reduce inventories,” warned Mitsuoki Hino, chairman of the Non-Integrated Steel Producers" Association (Fudenko). Hino, who is also president of JFE Bars & Shapes, has made similar pleas for market stability in the past but this time his concerns seem well founded.
Recent data from the Japan Iron & Steel Federation shows that rebar inventories have continued swelling since July and by end-November had reached 648,000 tonnes. This represented a 2.5% rise from October but a near 23% jump from July.
The increase is in spite of mills" production cuts. Rebar output in November dipped by 14% to 712,000 t from October and by 23% from July. Shipments are falling faster than mills can cut production, which is creating the climb in stocks.
“The business climate is tough at the moment, but we believe that demand in countries with large populations such as China and India will recover sooner or later,” says Masaki Ishikawa, a steel division official of Japan’s Ministry of Economy Trade & Industry. He adds that the Japanese government “will support” steelmakers until the recovery arrives.
Some mini-mills have already applied for or are considering applying for a government subsidy to retrain employees affected by production cuts. Nippon Steel Group mini mill Osaka Steel is among those applying.