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Commodities

Prices ebb for building materials amid commodities rout

TOKYO -- Construction materials have gotten cheaper amid the commodities bust and shrinking demand, bringing some needed relief to companies hit by rising costs to build.

     Steel H-beams now go for just over 70,000 yen ($590) a ton on the open market, down 11% from a year ago. Steel rods used for reinforcing bars have plunged 20%.

     And 3.2mm-thick hot-rolled steel sheet, used in many building materials, has eased by more than 10% to 58,000 yen a ton.

     Cratering prices of iron ore, coal and ferrous scrap metal amid the Chinese economic slowdown are behind the drops. Demand has also failed to pick up as expected during the second half of fiscal 2015, according to a source at JFE Steel.

     Businesses are taking a cautious stance on capital spending in response to uncertainties in emerging economies, according to a source at the Japan Iron and Steel Federation.

     For plastics, cheap crude caused PVC prices to slip 3% in October, with the material trading for roughly 153 yen to 165 yen per kilogram domestically. With oil prices further depressed, talks are being held for additional 2-3% cuts.

     Other materials are seeing a lull in prices. Tokyo-area wholesale prices for plywood used in concrete forms have held steady at around 1,380 yen to 1,400 yen for about six months. Stalled demand due partly to fewer public works projects has put the brakes on surging prices brought on by a shortage of Malaysian timber.

     Ready-mix concrete has been stuck at around 13,600 yen per cu. meter in the Tokyo area since fall. Concrete makers had been raising prices to compensate for rising cement and labor costs, but purchasers have stepped up their resistance. Price hikes are especially impractical in rural regions, where construction projects are few and far between.

     With cheaper building materials offsetting rising costs for labor, especially in urban areas like Tokyo, many believe that construction expenses will finally peak. 

(Nikkei)

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