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Business trends

Bolt shortage jams construction ahead of Tokyo Olympics

Shipments of other steel products disrupted as building plans are delayed

The New National Stadium, the main venue for Tokyo 2020 Olympics and Paralympics, is seen under construction in Tokyo's Shinjuku Ward.

TOKYO -- Japan's shortage of high-tension bolts has become so severe that construction projects are being put on hold, creating bottlenecks that may cut into demand for related materials.

Companies started delaying or suspending projects last fall, and the government recently took the unusual step of appealing directly to the private sector in an effort to secure a stable supply.

The situation is likely to get worse as construction for the 2020 Tokyo Olympics gathers pace. Delays and stoppages create headaches for the companies involved, but also threaten to weigh on demand for other steel products. As construction grinds to a halt, orders for other equipment and materials drop off.

"We're waiting six months for bolts to arrive. It's getting tough for some small and medium projects," said the person in charge of steel products at a steel trading company.

Some shipments of I beams, which are used to construct the steel frames of buildings, have been halted due to stalled construction projects. "If it's a delay, it can't be helped." said a business manager. "But if it becomes a suspension, we'll lose sales opportunities."

The bolt shortage became apparent last summer and prices have been gradually rising since then. Construction sites now pay about 290,000 yen ($2,600) for a ton of bolts. Last year, from spring to fall the price rose by about 30,000 yen.

"If we can't get a sense that the shortage is going to be solved, the price could keep increasing," said a person who handles bolts at a steel trading company.

There are several domestic bolt makers, including Nippon Steel and Sumikin Bolten in Osaka. Every month it produces about 10,000 tons of bolts, but it is unable to keep up with demand. A particular steel wire, used as a base material in manufacturing bolts, is also used to make car parts. Securing more is not an easy task.

To cope with the shortage, some construction sites are ordering more bolts than they actually need. That has further cut into wholesalers' inventories.

The infrastructure ministry and the economy ministry tried last December to ease the pressure by appealing to both the construction industry and bolt producers. The government asked construction companies to hold down excessive orders and bolt makers to make plans to meet demand.

So far the requests have not had an effect.

Imports of South Korean bolts have been growing amid the shortage. Shipments to Japan could total between 500 tons and 1,000 tons per month after the government approved their use last year.

But in addition to construction for the 2020 Olympics, public investment in infrastructure for the games will place even greater strain on the supply of bolts. Project delays and disruptions in shipments of other steel products are likely to worsen unless the shortage can be eased.

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