Lower Japan Carbon Steel Demand in 2H, Nippon Steel

Nippon Steel revised the estimate for Japanese carbon steel demand downward to 30.88 million tonnes in October-March period, which is 2.03 million tonnes lower than estimate as of October. The firm expects the construction materials demand will be 11.66 million tonnes, which is 2.13 million tonnes lower than former estimate and 2.56 million tonnes lower than same period of previous year. The firm concerns potential oversupply when domestic steel production keeps high level including for construction materials. Nippon Steel expects the carbon steel demand for manufacturers is 19.22 million tonnes in October-March period, which is higher than 19.12 million tonnes of former estimate and 500,000 tonnes higher than same period of previous year. However, the building demand drops sharply due to very slow building activity after start of new building standard law. The users try to secure the materials in advance when the steel price increases with pressure of higher raw materials cost though the steel inventory needs some adjustment. The firm expects the housing start decreases to 1.03 million units in fiscal 2007 ending March 2008 compared with 1.29 million units in fiscal 2006 while the building start for nonresidential building decreases to 62.86 million square meters of floor space from 72.12 million square meters. The firm expects the special steel demand is 7.67 million tonnes in October-March period and 15.08 million tonnes for the full year compared with 7.52 million tonnes and 14.73 million tonnes for previous year. The total domestic steel demand is 77.5 million tonnes for fiscal 2007 compared with 79.36 million tonnes in fiscal 2006.