Posted on 24 Apr 2024
Weak demand for steel for construction, sluggish sales for the manufacturing sector and a difficult export environment contributed to crude steel production in Japan falling during the fiscal year 2023 to end-March to 86.83 million tonnes, lower by 1.1% on-year and making for the second consecutive year of decline, according to new data released by the Japan Iron and Steel Federation (JISF) on March 22.
Last year also marked the third time since Fiscal 1973 that Japan's crude steel production on an annual basis has fallen below 90 million tonnes, following Fiscals 2020 and 2022 when the Japanese economy struggled. The exception was in Fiscal 2021 during which output recovered to the 96 million-tonnes level on hopes of a business revival after the coronavirus pandemic which never eventuated, Mysteel Global notes.
By steelmaking route, crude steel production last fiscal by converters totalled 63.85 million tonnes, down 0.7% on year, while the electric-arc-furnace (EAF) steel mills produced 22.98 million tonnes, down by 2.3% from the previous fiscal. The ratio of EAF steel to converters was 26.5%, a slight decrease from the previous fiscal's 26.8%.
Construction accounts for about half of Japan's total domestic consumption of steel – both direct sales to contractors and sales through dealers – and although consumption in the non-housing sector was reasonably steady last year, thanks to the building of semiconductor factories and warehouses, the sector was challenged overall by rising costs and ongoing labour shortages, the JISF noted.
On the most recent Federation data, steel ordered for construction use during the period April 2023-February 2024 fell by 7.1% to 7.99 million tonnes. Steel ordered by dealers (most of which is for construction), rose by a tiny 1.7% over the same period to 10.23 million tonnes.
Similarly, except for steel for automotive applications, demand from the manufacturing sector remained dull, with orders from the industrial machinery, electric appliances, rolling stock and container manufacturing sectors all falling year-on-year during April-February.
Indeed, at a briefing held recently, Japan's Ministry of Economy, Trade and Industry Japan (METI) was candid about manufacturing demand trends. "The pace of recovery in the automotive sector remains uncertain, and the industrial machinery sector can easily be affected by overseas demand. Therefore, both (sectors) are determined as downward risks," METI admitted. During April-February, steel orders placed by Japan's automobile manufacturers totalled 6.72 million tonnes, up 7.7% on year.
Looking ahead to crude steel production during the current fiscal, the JISF on Monday was guarded, saying that it expects Fiscal 2024 output to remain "on par with Fiscal 2023," and warning that steelmakers will continue to be tested by "downside elasticity".
Japan's Fiscal 2023 production of carbon steel items (selected)
Product | Fiscal 2023 (April-March) | % chge YoY |
H-beams | 3,366,600 | -6.8% |
Small bars (incl rebars) | 7,365,100 | -3.3% |
Wire rods (ordinary) | 408,000 | -2.3% |
Heavy plates | 8,487,800 | -7.1% |
Hot rolled coils | 36,499,300 | +2.7% |
Cold rolled coils | 14,038,700 | -0.5% |
Galvanized sheets | 8,461,500 | +1.6% |
Welded/seamless tubes | 3,204,300 | -5.6% |
Unit: Tonnes
Source: JISF
Source:Mysteel Global
