Japan Crude Steel Output Forecasted at around 110MT in F2011

Japan Iron & Steel Federation announced on Monday Japanese annual crude steel production is forecasted to maintain approximately 110 million tonnes for fiscal 2010 ending in March 2011, almost the same volume as in fiscal 2009. Domestic steel demand is recently weakening from manufacturing industries, mainly automobile and appliance industries, while recovering from construction market. The export demand is expected to keep around 40 million tonnes per year mainly for Asia though there are risks of demand shrinkage by higher yen rate or steel capacity expansions in East Asia.

This is the first demand forecast announcement by the federation since 2008, after Lehman’s fall. The federation judged steel market conditions turned relatively foreseeable in recent days.

The federation estimates Japanese GDP would increase by around 1.2% in fiscal 2011. Steel consumption and production are currently declining after expiration of governmental economic measures while steel demand is supported by gradual recovery of domestic construction market and steady export along strong demand in emerging countries.

World Steel Association (WSA) announced in October Japanese steel consumption is forecasted to increase by 19.1% in CY2010 from CY2009 while decrease by 1.4% to 62 million tonnes in CY2011 due to slumber of activity for manufacturing industry, higher yen rate or tight budget. Japan Iron & Steel Federation incorporated new market factors in addition to WSA’s forecast, especially positive factors in domestic steel market.

Japanese crude steel production decreased by 13% to 105.5 million tonnes in fiscal 2008 from fiscal 2007. The production continued to decrease to 96.45 million tonnes in fiscal 2009, which hit below 100 million tonnes for the first time in 10 years.