Steel prices turn red hot for Japan builders on Russia shock

Prices for architectural steel in Japan have risen to the highest levels in more than a decade as Russia's invasion of Ukraine disrupts supply chains for a wide range of building materials, including wood and cement.

Tokyo Steel Manufacturing on Tuesday raised the price of H-beams used in building construction to the most in more than 13 years, 121,000 yen ($1,000) per ton. Kyoei Steel announced a 7% price hike for steel rebar.

With steel proving too hot to handle, companies are starting to postpone increasingly costly capital investments, which could have knock-on effects on the broader economy if the trend continues.

Russia and Ukraine together accounted for roughly 11% of global steel exports in 2020, according to data from the World Steel Association. Production facilities in Ukraine have been shut down, and one of Europe's largest steel works, located in the besieged city of Mariupol, has suffered heavy damage.

The steep increase in H-beam prices reflects a 20% jump in the price of scrap steel -- used to feed electric arc furnaces like Tokyo Steel's -- between the start of the year and mid-March.

Prices for stainless steel used in building roofs and walls have reached a nearly 14-year high and are expected to keep climbing, as they have not fully absorbed nickel's dramatic rally this month.