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TOKYO, March 17 Tokyo Steel Manufacturing Co
will maintain current product prices for delivery in
April as customer stockpiles grow after a winter freeze and
labour shortages curbed construction projects, said the
country's top electric furnace steelmaker.
But the firm, which feeds its furnaces with scrap steel
rather than iron ore, said that longer term appetite for steel
in Japan would be strong as construction work gathered pace.
The company's pricing strategy is closely watched by Asian
rivals such as POSCO, Hyundai Steel Co
and Baosteel, which aim to boost exports to Japan.
"Steel demand for public works as well as private projects
including redevelopment projects in the Tokyo area remain
strong," Managing Director Kiyoshi Imamura told reporters.
That contrasts with regional neighbour China, where the
government is desperate to curb excess capacity in its bloated
and ill-regulated steel sector by closing outdated and polluting
"Given the recent drop in scrap prices and higher stockpiles
of steel products, we will hold our prices unchanged," Imamura
said on Monday. April will be the third straight month without a
He noted that the price of scrap steel had plunged about
10,000 yen ($99) per tonne in the first two months of this year
to around 28,000 yen, with potential buyers less likely to make
purchases as snow interrupted transportation. Many parts of
Japan were hit by severe snow storms this winter.
Japanese inventory of three major steel sheet products -
hot-rolled sheet, cold-rolled sheet and surface-treated sheet -
stood at a 15-month high of 4.09 million tonnes in late January,
according to an industry source.
As well as snow, Imamura said that growth in construction
work had been crimped by a shortage of workers and trucks. With
Prime Minister Shinzo Abe pushing for more public works as part
of a drive to boost the country's economy, there have been fears
over whether the country's rapidly aging population can supply
But Imamura said the spike in stockpiles was temporary, with
construction appetite soon expected to eat into them.
"Steel frame demand in Japan, for example, is expected to
rise by 10 percent in the new fiscal year starting in April.
Demand will likely pick up from July at the latest after
budgeted public money starts flowing into projects."
Tokyo Steel's prices for main product H-shaped beams will
stay flat at 80,000 yen ($790) per tonne in April, while prices
for hot-rolled coil will remain at 66,000 yen per tonne.
Japanese imports of steel products hit a 16-year high in
January, with overseas steelmakers targeting the country as
China's huge overcapacity drives a prolonged price slump.
Both Chinese steel futures and spot iron ore prices lost 3.6
percent last week, the biggest weekly loss for the two
commodities since May last year.
($1 = 101.4650 Japanese Yen)
(Reporting by Yuka Obayashi; Editing by Joseph Radford)