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Tokyo Steel to cut product prices by 6-11% in April as virus spreads

[TOKYO] Tokyo Steel Manufacturing, Japan's top electric-arc furnace steelmaker, said on Monday it will cut all steel product prices in April by about 6-11 per cent to reflect weak market conditions amid deepening fears over the coronavirus pandemic.

The cut is the first by the company in 6 months. Price reductions ranged from 5,000 yen to 9,000 yen (S$66.47 to S$119.64) a tonne.

For April, prices for steel bars, including rebar, will be lowered by 7,000 yen, or 11.3 per cent, to 55,000 yen a tonne, while prices for its mainstay H-beams will be also trimmed by 7,000 yen, or 8.4 per cent, to 76,000 yen a tonne.

Prices of hot-dip galvanised coils will be cut by 5,000 yen, or 5.5 per cent, while that of channels will go down by 9,000 yen, or 11.1 per cent.

"Uncertainty is sweeping the steel industry as economic activities have slowed in the wake of the coronavirus outbreak," Tokyo Steel managing director Kiyoshi Imamura told reporters at a briefing.

"We've decided to slash prices to meet the current weak market conditions although actual demand has not fallen as much as people fear," he said.

Domestic inventories for steel sheets remain high while sluggish overseas markets and the recent rise in yen against the US dollar also pose a risk of more cheap imports from neighbours such as China, South Korea and Taiwan, flowing into the Japanese market, he added.

Asked about the potential impact if the 2020 Tokyo Olympics is cancelled or postponed, Mr Imamura said he was concerned about potential fallout in service and travel industries, which could dampen the Japanese economy.

"I haven't heard of any cancellations in construction projects due to the virus outbreak... but some companies may rethink their plans to build new hotels or commercial facilities if this uncertainty continues," he said.

Japanese steel demand had been supported over the past few years by a series of construction projects for the Olympics, redevelopment projects in the Tokyo metropolitan area and plans to build new hotels across the nation to meet the growing number of foreign tourists.

Tokyo Steel's pricing is closely watched by Asian rivals such as South Korea's Posco and Hyundai Steel, and China's Baoshan Iron & Steel (Baosteel).