Posted on 27 Dec 2011
Japanese demand for crude steel is expected to fall 6.2 percent from a year earlier to an almost two-year low of 26 million tonnes in the January-March quarter, as a plunge in steel exports outweighs strong demand from the domestic auto sector, the trade ministry said on Tuesday.
The ministry estimates Japan's annual crude steel output for the year to March 2012 at 105.92 million tonnes, 4.87 million tonne, or 4.4 percent, less than a year ago.
A nearly record-high yen and devastating floods in Thailand have forced Nippon Steel Corp and JFE Steel Corp , Japan's top two steelmakers, to curtail exports. The strong yen has also opened the door for cheaper imports from Asian rivals like South Korea's POSCO and Baosteel of China.
"Exports to Thailand will show a recovery in the next quarter, but demand for steel in the next financial year remains cloudy due to an uncertain outlook for the yen rate and the European financial crisis," said Koichi Shiota, director at the ministry.
Many Japanese manufacturers, which have placed part of their supply-chains in Thailand, have reduced output in the wake of the flooding, resulting in a drop in demand for Japanese steel. Japan exports about 400,000 tonnes of steel to Thailand a month.
Inventory adjustments will also likely keep steel production in check in the January-March quarter, Shiota said. Quarterly crude steel production of 26 million tonnes will be the lowest since July-September of 2009.
But demand from domestic manufacturers is expected to stay solid, showing a recovery from the March 11 earthquake, which disrupted domestic supply chains and cut output.
Carbon steel consumption at domestic carmakers is expected to jump 55 percent from a year earlier to 3.27 million tonnes during the January-March quarter. That of machinery makers is seen rising 7.8 percent to 1.28 million tonnes, the ministry said.
Domestic demand for carbon steel is estimated to fall 0.5 percent to 18.67 million tonnes. Exports are seen falling 18.6 percent to 5.9 million tonnes, overshadowing a 10.8 percent gain in domestic demand to 12.77 million tonnes.
