Japan Raw Steel Output to Rise by 0.6% in July-September

Japanese raw steel output increases by 0.6% to 28.218 million tonnes in July-September from April-June, announced by Ministry of Economy, Trade and Industry on Friday. The production is 5.2% higher than demand outlook when Japanese integrated steel makers increase the output to serve high level demand from automobile and construction machinery. However, METI warns the demand could decrease in second half of fiscal 2010 ending March 2011 when the stele export could decrease due to Chinese demand slowdown and Japanese automobile sales would decrease after subsidiary for eco-friendly vehicle will end by end of September.

The quarterly output is 9.1% lower than the peak in April-June 2008 and the annualized output is 112.87 million tonnes as fiscal 2004 and 2005. Japanese steel demand is firm when domestic automobile output plan was revised upward from 2.3 million units to 2.47 million units in July-September. METI expects the steel export could decrease but Japanese makers are still optimistic for the export.

The carbon steel plate output increases by 300,000 tonnes in July-September from April-June due to higher demand for construction machinery. Domestic electric furnace steel makers reduce the output by 280,000 tonnes due to summer time maintenance. The steel export will decrease by 250,000 tonnes mainly for sheet steel due to lower offshore market price and higher yen rate. METI notes steel industry should be cautious for trade dispute.

METI also announced Japanese special steel products output will increase by 3.2% to 5.212 million tonnes in July-September from April-June. The output represents 94% of the level in April-June 2008 when domestic demand increases for automobile and construction machinery. The export decreases for some items when domestic makers focus on shipment for domestic users.