TOKYO: Tokyo Steel Manufacturing , Japan’s top electric arc furnace steelmaker, said it will cut prices for March delivery, by as much as 14 percent for one product, to compete against imports amid a firm yen and on slow domestic demand.
The company will cut prices by between 3,000 yen to 7,000 yen ($27 to $62) a tonne, it said in a press briefing on Monday. That is between 4 percent and 14 percent, Reuters calculations show.
This is Toyko Steel’s first price cut in five months and is the latest in a series of weak signals for Japan’s economy that have raised doubts about government efforts to reignite growth and end decades of deflation. Tokyo Steel’s pricing strategy is closely watched by Asian rivals such as Posco, Hyundai Steel Co and Baosteel, which export to Japan.
Prices for the company’s main product, H-shaped beams, which are used in construction, will fall by 3,000 yen, or 4 percent, to 67,000 yen ($593.97) per tonne in March. Prices for steel bars, including rebar, will drop by 14 percent to 42,000 yen a tonne.
“The price cut is to prevent cheap imports from flowing into the local market in the face of the recent jump in the yen against the U.S. dollar,” Tokyo Steel’s Managing Director Kiyoshi Imamura told reporters.
The yen has climbed more than 6 percent against the dollar so far this year as it continues to benefit from its safe haven status amid a rout in global equity markets. “Domestic demand has also languished as a lack of workers and processing facilities has delayed construction projects,” said Imamura.
The company expected construction demand to improve by the end of 2015 when it last cut prices for October delivery. However, the delay in construction of Japan’s new national stadium for the 2020 Summer Olympic Games until 2017 has crimped steel demand, said Imamura.
“The delay in new national stadium project has also slowed other Olympic-related works by about a half year, dragging on overall local construction demand,” he said.
“But we expect to see a pick up in and after summer as the stadium project is set to start next year,” he said. Japan’s January crude steel output fell 2.8 percent from a year ago, marking 17 straight months of decline, the longest streak since the 1997 Asia financial crisis.
