Slump of Japan Automakers Impact on Steel Output

Japanese automakers reduce the output under worldwide slower sales. They revised the output and sales targets downward for second half of the year to March 2009 when the sales decreased even in China and India along with North America, Europe and Japan. Japanese steel makers try to adjust the steel supply for automobile when they expect the output will decrease to 5.7-5.8 million units in the second half from 6.1 million units in same period of previous year.

Japanese automobile output will decrease to 11.6 million units for finished car and 8.6 million units for knockdown sets in fiscal 2008 ending March 2009 compared with 11.79 million units and 8.8 million units in fiscal 2007, according to industry estimated as of October end. The output could decrease more depending on the market.

Japanese automobile output was 5.79 million units in April-September, which was around 310,000 units or 5.6% higher than same period of 2007, Japan Automobile Manufacturers Association. The output increased for the first time in 2 years as the first half year when the demand increased by 9.7% for export while the domestic demand decreased by 2.7%.

However, the worldwide automobile sales slowed down under higher oil market. The sales started to drop even in emerging market after world economy slowed in financial crisis after bankruptcy of US major securities house, Lehman Brothers in September. Honda Motor’s vice president Koichi Kondo said at press conference for second quarter results in October 28 the market move is beyond expectation and North American market would worsen more and he cannot see the future of emerging market. Worldwide automobile market increases the uncertainty.

A source in Japanese integrated steel maker’s sheet steel sales division said automobile industry’s slump impacts on steel industry heavily due to the major influence on the parts and related industry while automobile industry’s high level production supported Japanese steel demand despite of the slower construction market. Japanese steel makers try to adjust the supply to slower demand while they reduce the inventory at makers and processors.