News Room - Steel Industry

Posted on 30 Jun 2010

Japan Q2 crude steel output seen up 10.7 pct y/y

Japan's crude steel output is expected to grow 10.7 percent in the July-September quarter from a year earlier as relatively solid demand at home will help offset a likely slowdown in exports, the trade ministry said.

 

Japan's crude steel output is expected to total 26.82 million tonnes during the quarter after a survey of manufacturers, exporters and steelmakers, the Ministry of Economy, Trade and Industry said.

 

That would be down 4.3 percent from April-June.

 

Signs of a slowdown in China's property sector have led to heavy inventory correction in the region and stronger downward pressure on prices since mid-April, raising concerns that Japanese steelmakers will be forced to cut back on their exports.

 

Japan has emerged as a major exporter of steel to the region, improving capacity utilisation and sequential earnings.

 

The ministry expects Japan's exports to fall 6.7 percent, or 500,000 tonnes, from the preceding quarter to 6.95 million tonnes, amid a destocking cycle in China, lower prices in the region and the yen's appreciation. Compared with a year earlier, that would be still up 5.3 percent.

 

The ministry said it is not worried about short-term fluctuations in exports. "We haven't heard from industry people, such as in the cars and electronics sectors, anything about downside potential for steel demand," said Masaki Koito, a director at the ministry. "We believe underlying demand in Asia, including China, remains solid."

 

Demand for steel products in July-September is seen rising 8.8 percent from a year earlier to 23.8 million tonnes, the ministry said.

 

In the domestic market, demand shows a slow but gradual pickup.

 

The ministry expects demand from the construction industry to grow 4.7 percent in July-September from three months earlier as both housing and construction starts recover and orders from Asian customers are rising.

 

Demand from the manufacturing sector is seen growing 1.1 percent from three months earlier. That includes a 3.9 percent rise in demand for industrial machinery, which had been in the doldrums in the past year as companies' cut back on capital investment. It would be up 28 percent from a year earlier.

 

Crude steel output surged 50.2 percent in May from a year earlier to 9.73 million tonnes, the highest since October 2008, powered by robust exports to other Asian countries.