News Room - Steel Industry

Posted on 28 Dec 2009

Japan steel output recovery to slow in Jan-Mar

A recovery in Japan's crude steel output will extend into the January-March quarter on brisk exports and demand from manufacturers, but the recovery trend is losing steam amid an uncertain economic outlook, a ministry official said.

 

The Ministry of International Trade said on Friday that Japan's output will likely total 26.72 million tonnes during the quarter, up 51.9 percent from the same period a year earlier when it hit a low point in the industry's worst recession in decades.

 

But output next quarter is expected to be down 0.5 percent from October-December, the first such fall in four quarters.

 

"Momentum will slow in the January-March quarter," Masaki Koito, director of the ministry's iron and steel division, told a news conference. "We are not in a situation to see a spectacular output recovery as in the past three quarters."

 

As factors clouding the outlook he cited the doldrums in the domestic construction market, uncertainties on the yen's exchange rate and rising competition from Asian mills as they build up capacity.

 

The ministry, which surveyed steelmakers, expects Japan's crude steel output in the current year ending next March 31 to total 96.91 million tonnes, the lowest in more than a decade.

 

Japan's crude steel output marked its first year-on-year rise in 14 months in November on strong exports to Asia and a pickup in demand from automakers and other manufacturing companies at home.

 

Aided by brisk demand in China and other Asian countries, Japan's top steelmakers including the world's second-biggest, Nippon Steel Corp (5401.T), and sixth-ranked JFE Holdings Inc (5411.T) are boosting exports of high-end products such as galvanised steel for use in cars and electrical appliances.

 

JFE said this month there had been a surge in inquiries from its Asian customers and it would restart one of its two idled blast furnaces in February.

 

But a construction slump in the domestic market has deepened as the new government that took office three months ago has frozen many public works projects, forcing construction steel makers to cut prices and slash production.