Japan Steel Demand to Drop by 12% in January-March, METI

Japanese demand for steel products will be 21.66 million tonnes in January-March, which is 12.0% lower than October-December and 23.8% lower than same period of 2008, announced by Ministry of Economy, Trade and Industry on Thursday. The ministry expects the steel shipment demand represents 21.1 million tonnes of raw steel output, which is 22.0% lower than October-December and 31.6% lower than same period of 2008. Domestic steel demand is reducing significantly for automobile, industrial machinery, civil engineering or building construction. Japanese steel export will decrease due to dropping overseas steel market price and overseas demand. The raw steel output will be lowest since January-March 1970 of 18.28 million tonnes.

The raw steel output will decrease for 3 quarters from the previous quarters and for 2 quarters from the same period of last year and be below 30 million tonnes for 2 quarters.

The ministry said Japanese steel demand will be significantly lower level in the first half of fiscal 2009 at ended of March 2010. It is the point that the output reduction of Japanese integrated steel makers.

Total amount of the export decreased by 26.7% in November from a year earlier. Japanese order volume decreased by 27.2% for machinery in October from a year earlier, by 24% for industrial machinery and by 71.85 for ship. The order volume for tool machine decreased by 62.2% in November from a year earlier, which was record low.

Japanese steel sheet inventory was over 4.5 million tonnes at the ended of December. The Ministry pointed out the inventory adjustment is needed in April-June 2009 when decent inventory level is 3.7 million tonnes.

Especially, special steel demand will decrease by a large margin when overseas automobile output is reducing significantly in such as North America..

Japanese makers and dealers’ inventory will be 6.77 million tonnes at the ended of December and the inventory rate will be 1.15 months of shipping. The Ministry expects Japanese makers and dealers’ inventory will be 6.27 million tonnes at the ended of January 2009.