Japanese steel prices continue to decline in September
Japanese steel producers are continuing to see weaker prices in September as the global economic crisis hit steel prices, according to the latest figures from the Bank of Japan.
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Iron and steel prices last month declined by 0.2% from August, according to the latest Corporate Goods Price Index (CGPI), the Bank of Japan’s equivalent of the Producer Price Index.
Compared with a year ago, prices are down by 10%. They are also down by 1% on the corresponding month in the previous quarter.
Moreover, the fall in August’s prices have been revised from an initial drop of 0.2% to 0.3%.
The latest figures mean that prices have now posted back-to-back declines for 12 straight months.
Steelmakers note that despite recent falls, it remains hard to raise prices as demand in many sectors, especially from the key manufacturing and housing markets, remains very weak.
Meanwhile, tumbling regional prices and the strong yen also added pressure to export prices.
Export prices for metal products including steel fell by 0.8% on a yen basis, outstripping the 0.4% fall in contract currency prices.
The rise in the value of the Japanese currency has also meant cheaper imports.
Import prices in contract currency rose by 1.9%. But in yen terms, they were up by just 1.3%. That will almost certainly mean that steel imports will continue to rise, particularly with the region facing over-capacity and a slowdown in the global economy, say market watchers, who point out that exports will continue to struggle.
The irony is that end-product prices, including those of transportation, general machinery, electrical and electronic equipment, continue to generally hold up far better.
For example, prices of transportation equipment – which includes the key auto sector – dropped by just 0.2%, and are only down 1.4% from year-earlier levels, while prices of metal products rose by 0.3% and those of production machinery, by 0.1%.
To make matters worse for steelmakers, their energy input costs still remain high.
While it fell by 0.2%, the figure takes back little of the 1.8% increase seen in August and costs are up by 8.7% from year-earlier levels.