TOKYO: The announcement by Japan's largest electric furnace operator, Tokyo Steel Manufacturing Co. Ltd., that it would slash its prices by up to 38 percent sent shockwaves through the Japanese steel industry, with other steelmakers, trading houses and customers all struggling to work out the long-term implications of the move.

The company said that effective with November shipments it would reduce rebar by 38 percent to 57,000 yen ($578) per tonne; H-beams by 30 percent to 83,000 yen ($842) per tonne; and hot-rolled sheet by 26 percent to 72,000 yen ($731) per tonne.

Tokyo Steel, which implemented its first across-the-board price reduction in more than three years for September contracts after scrap prices began to decline in August, said that its latest move was justified by the collapse of ferrous scrap raw material prices to as low as 18,000 yen ($183) per tonne from close to 70,000 yen ($711) per tonne in mid-July.

It added that it would be more effective to try to establish a bottom to the...