Japanese steel prices stalled in May
Japanese steel producers saw prices stall in May after soaring in April.
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Domestic wholesale iron and steel prices were unaltered from the previous month after they jumped higher by 3.1% in April, according to the Bank of Japan’s latest Corporate Goods Price Index (CGPI), its equivalent of the Producer Price Index.
Nevertheless, May’s wholesale prices were around 7% higher than year-earlier ones. Compared with the same period in the previous quarter, steel prices are up by 3.1%.
However, prices are likely to remain moribund for a while as Japanese consumers continue to work through the impact of April’s consumption tax increase.
Japan’s largest steel producer, Nippon Steel & Sumitomo Metal Corp, announced on Monday that it would leave its H-beam price unchanged for June orders, while Tokyo Steel, the country’s largest H-beam producer, announced on Tuesday that it is extending its hold on prices for a sixth month into July.
Meanwhile, export prices continued their downward trend amid chronic oversupply in the Asian region. Although in contract currency terms prices were higher by 0.1% month-on-month, they were 0.5% lower in yen terms as a result of the strengthening Japanese currency last month.
Moreover, the positive impact of the yen’s decline since late 2012 has begun to wear off. While prices in contract currency terms were down 2.5% compared with the corresponding period a year earlier, in yen terms they were 2% lower, a difference of just 0.5 percentage points.
As early as April, the gap between the two prices was closer to 5%, allowing Japanese exporters to offset slumping volumes with higher returns in yen terms.
Meanwhile, import prices rose by 1.2% month-on-month in contract currency terms and 0.6% in yen terms.
Any pick-up in import prices will be welcome. With regional oversupply and Japanese steel demand still relatively robust, imports of steel products have surged in recent months, causing voices of alarm among industry officials to start ringing.
In April, imports surged to a nine-year high for the month, while exports slumped by more than 16%.