Japan Steel Demand to Rise by 4% in January-March, METI

Japanese demand for steel products will be 26.99 million tonnes in January-March, which is 0.5% lower than October-December and 4% higher than same period of 2006, announced by Ministry of Economy, Trade and Industry on Wednesday. The ministry expects the steel shipment demand represents 29.1 million tonnes of raw steel output, which is 3.5% lower than October-December and 3.9% higher than same period of 2006. The raw steel output will increase to second high of 117.32 million tonnes for full year to March 2007, which is 4.1% higher than previous year. The raw steel output will increase in January-March to reach 29 million tonnes for the first time as the quarter. The output increases for 5 quarters in a row though the volume is lower than October-December, which represents first drop in 6 quarters, due to some maintenance by integrated steel and electric furnace steel makers. The domestic demand will increase in January-March from same period of 2006 due to higher demand for manufacturing including shipbuilders, automobile and industrial machinery while the demand decreases seasonally for construction and civil works. The export demand increases when automobile output and shipbuilding activity are firm in China and South Korea. Special steel demand also increases due to higher demand for high tensile steel from automobile and energy industry. METI expects hot, cold and coated sheet inventory keeps the low level at less than 4 million tonnes in January-March while the demand keeps firm especially for domestic market. However, the ministry warns potential trade war when oversupplied China increases steel export to Europe and USA while US steel market is suffered from lower price and higher inventory. The ministry said Japanese steel industry should keep cautious for balanced supply and inventory depending on steel items when uncertainty caused by China increases. METI said Japanese steels should prepare to reduce export during the quarter to deal with potential oversupply in the market.