Japan Tighter Sheet Steel Supply

Japanese sheet steel supply gets tighter despite of very slow building market when automobile output is annualized 11.7-11.8 million units for finished car and 8.7-8.8 million units for knockdown sets for fiscal 2007, which is more than expected by major steel makers. Some users try to secure pickling steel and cold rolled flat steel in advance with expectation for tighter supply. Japanese major integrated steel makers expect the tight condition could continue for April-June when building market would recover while automobile output slows down seasonally. Japanese automobile output increased by 1.0% to 7.638 million units for April-November from same period of 2006, according to Japan Automobile Manufacturers Association. The output kept more than 1 million units per month since September. The output is expected to reach 11.83-11.87 million units for fiscal 2007 compared with 11.7 million units of estimate by integrated steel makers. Automobile output is expected to keep high level in January-March. An integrated steel maker source said the sheet steel demand is 400,000-500,000 tonnes more for January-March than expected while building demand is 100,000-200,000 lower than expected. Japanese housing start decreased by 27.0% in November from a year earlier after 35% drop in October and 44% drop in September. Japanese building activity is very slow after new building standard law started June. Some building materials makers expect the order receipt could decrease by 15% in January-March from same period of 2007. The supply is limited when JFE Steel plans regular maintenance for 3 hot strip mills at Kurashiki of West Japan works, Keihin and Chiba of East Japan works. The distributors’ inventory decreases when steel makers reduce the supply for distributors to secure supply volume for contract users.