Posted on 31 Dec 2024
A forecast for Japanese steel demand in terms of crude steel for the coming January-March quarter, the last quarter of the country's current fiscal year, announced last week by the Ministry of Economy, Trade and Industry (METI), contained a few encouraging observations but the outlook for the full fiscal's steel output was bleak.
Based in next quarter's production, the full fiscal result for April-March is likely to reach 83.72 million tonnes, lower by around 4% from the fiscal 2023 total and would be the second lowest since fiscal 1970, METI's data show, the lowest being the 82.78 million tonnes Japan produced during fiscal 2020 at the height of the pandemic when Japan's economy was slowing markedly.
The production decline for the full fiscal this year would also mark the third consecutive year that the total is lower than that for the previous year.
Domestic demand for ordinary steel during January-March will increase by a tiny 0.9% on year to 9.88 million tonnes, METI said in its December 26 forecast, but warned that against the backdrop of labour shortages and rising material prices, demand for construction is expected to remain low.
Data just released by Japan's Ministry of Land, Infrastructure, Transport and Tourism (MLIT) showed that during November, construction starts on all types of buildings was lower by 0.9% year on year at 8.44 million square metres but this was down by nearly 6.6% from October. Within the total, starts on reinforced concrete structures reached 1.49 million sq m, lower by 16% from November last year and by a similarly large 13.5% from October.
As orders for standard construction steel items such as rebars are usually placed several months after building work begins, the MLIT statistics suggest the order volume steelmakers will receive next quarter will be smaller than those this quarter. Japan Iron & Steel Federation (JISF) figures show that in November, nationwide production of small bars (mostly rebars) totalled 568,400 tonnes, down 10.3% from November last year and making for the tenth straight monthly on-year decrease.
In its forecast, METI was also pessimistic about next quarter's steel demand for manufacturing, saying that "overall momentum" will be lacking. "Sales for automobiles are expected to increase year-on-year due to the recovery of production systems by automakers, but a significant rise is not expected," it warned.
In a media briefing given to announce the forecast, Manabu Nabeshima, director of METI's metals division, also confirmed comments made the same day by JISF chairman Tadashi Imai regarding Japan's response to mounting volumes of steel imports, acknowledging that the steelmakers are in discussions with the Japanese government about introducing measures to quell the inflow.
"We are in the process of communicating (with the JISF) to see if there is a flexible response, and we will respond appropriately depending on the situation," Nabeshima told Japanese media.
Imai had indicated that Japan was looking at adopting measures that could be introduced faster to those allowed for under WTO rules. "We are at a stage to finalize a proposal to the Japanese government to protect fair trade toward a sustainable development of the steel industry," he had stressed.
Meanwhile, Takashi Hirose, chairman of the Japan Steel Industry Advisory Committee and Nippon Steel vice president, painted a similar picture to METI regarding January-March steel demand, saying after an advisory committee meeting last Thursday that while current demand for steel products shows signs of picking up, the pace has stalled slightly, and the severe demand environment continues.
"During the coming quarter, we cannot expect a significant improvement, and we need to take measures based on this," he observed, adding that for the full fiscal year ahead, "we need to be prepared (for a delay in demand recovery)."
Source:Mysteel Global
