Japan Steel Demand to Rise by 1.4% in Oct-Dec

Japanese steel demand will increase by 1.4% to 27.69 million tonnes in October-December from same period of 2006, announced by Ministry of Economy, Trade and Industry on Friday. The demand represents 30.12 million tonnes of raw steel output, which is 0.2% lower than same period of 2006 and third high as the quarter. The raw steel output reaches record 119.48 million tonnes for 2007 topping 119.32 million tonnes in 1973. The construction demand increases by 70,000 tonnes for expansion of Haneda airport in October-December from July-September while the building demand decreases due to lower housing starts. The manufacturing demand increases for automobile to cover outage during major earthquake in Niigata and to meet higher export demand while the domestic sales are slow. Other manufacturers also lift the carbon steel demand under firm activity by shipbuilders, construction and industrial machinery makers. The special steel demand also increases due to strong demand for automobile export. The raw steel output increases in October-December from previous quarter for 3 consecutive quarters while the output decreases from same period of 2006 for the first time in 2 quarters. METI expects the demand keeps firm for October-December. However, METI warns the steel makers should avoid overstock when hot, cold and coated steel inventory keeps more than 4 million tonnes. METI said the makers also should optimize the plate supply to each user when the supply keeps tight for shipbuilding and industrial and construction machinery. METI also emphasizes the makers should be cautious for potential risks including higher yen rate, negative impact from US subprime loan issue and higher import from China and South Korea. METI expects the steel inventory held by makers and distributors was 6.4 million tonnes at the end of September, which represents 0.91 months of shipment. The stock for domestic shipment is estimated to be 5.45 million tonnes and 1.06 months for shipment. METI forecasts the inventory decreases to around 6.2 million tonnes at the end of December, in which the stock for domestic shipment is 5.26 million tonnes.