Japan Carbon Steel Order Drops by 4.2% in 2005

Japanese steel makers’ order receipt of carbon steel decreased by 4.2% to 75.144 million tonnes in 2005 from 2004, representing first decrease in 4 years, according to Japan Iron and Steel Federation. Lower demand for construction application and for Asian export reduced the order under lower domestic civil works and higher inventory in Asia while the manufacturers including automobile increased the order for 4 years in a row. The order in first half of 2006 is likely to be in line with 2005 with uncertainty of export market and domestic construction market tough the domestic manufacturers will keep the firm demand. The order from domestic manufacturers, which represented 30% of total order, increased by 4.3% to 22.36 million tonnes in 2005 from 2004. The order from automobile increased by 3.5% to 11.14 million tonnes, representing increases for 6 years in a row. The order increased by 13.4% to 4.86 million tonnes from shipbuilders, which increased for 3 years in a row, and by 7.8% to 20.7 million tonnes from industrial machinery, which increased for 4 years in a row. The order from construction, which represented near 20% of total order, decreased by 1.9% to 13.13 million tonnes in 2005 from 2004, representing first decrease in 2 years. The order from building decreased by 1.0%, which decreased for 2 years in a row, and the order from civil works decreased by 0.5%, which decreased for 6 years in a row though the order improved the second half of the year. The order from distributors, which are estimated to ship 70% of the materials for construction market, decreased by 5.1% to 16.51 million tonnes. The order for export decreased by 13.0% to 18.9 million tonnes in 2005 from 2004 representing first decrease in 2 years. Domestic integrated steel makers reduced the export since mid-2005 when Asian market had overstock and lower demand. The domestic makers keep the lower export and the export is likely to keep the low level when China keeps expanding the domestic output capacity. The steel order decreased by 5.6% to 6.207 million tones in December from a year earlier, representing decreases for 7 months in a row. The order decreased from construction and export while the order increased from manufacturers for 25 months in a row. The total order increased by 0.8% from November. The order decreased by 4.6% to 58.633 million tonnes in April-December from same period of 2004.