Japan Major Steels Warn Potential Downturn for Sheet Steel Market

Japanese integrated steel makers started to be cautious for potential oversupply of domestic sheet steel market. They try to find the trend with very slow domestic building activity and slower automobile export to USA while the domestic supply is still tight thanks to strong demand for Japanese manufacturers. The steel makers could reduce the supply for some applications depending on the demand activity. Japanese building start decreased by 16.0% to 13.368 million square meters in May from a year earlier, according to Ministry of Land, Infrastructure, Transport and Tourism. The figure decreased for 11 months in a row after new building standard law started in June 2007. The building activity gets slower in recent month due to slowing economy and surging steel and materials cost. Japanese appliances output decreased by 28.2% for refrigerator, by 1.2% for 1.8% for washing machine, by 35.4% for microwave and by 7.2% for air conditioner since April compared with a year earlier level while the output increased by 6.9% for flat panel television and by 33.0% for DVD recorder. The demand for traditional appliances decreases due to slower housing activity while the demand for audio and visual products is firm due to Olympic game and transition for digital broadcasting. US automobile sales decrease by 18.3% in June from a year earlier, which decreased for 8 months in a row due to higher oil price and slower economy. Toyota Motor recorded first double digit sales drop in 68 months. Japanese automakers could reduce the output due to slower US sales though the domestic output was planned to increase in fiscal 2008 started April from 11.79 million units in fiscal 2007.