Japan Special Steel Production to Increase in 2HF2010

Japanese special steel bar output is expected to increase in the second half of fiscal 2010 ending in March 2011 compared with the first half year. Japanese export of knock down components and truckloads is likely to increase while construction machine makers would keep steady outputs, according to Japanese integrated steel maker source. One senior official of Japanese major electric furnace special steel maker said they hold order backlogs until December and the users seem not to reduce order volume in a short term. Meanwhile, special steel makers are concerned on strong yen rate which may impact Japanese indirect export.

The senior official said Toyota Motor is expected to recover car production for January-March 2011 while Nissan Motor also suggests strong output plans. One integrated steel maker forecasts domestic completed car production would keep the volume as much as in the first half of fiscal 2010 while knock down export would increase by 5% and truckload export would increase by more than 10%. Construction machine production is expected to keep the level as high as in the first 6 months.

Japanese construction machine shipment value increased by 85% in August from a year earlier, year-to-year plus for 8 consecutive months, according to Japan Construction Equipment Manufactures Association. The association forecasts the shipment increases by 41% year-on-year in fiscal 2010 and by 10% year-on-year in fiscal 2011.

On the other hand, strong yen exchange rate impacts Japanese exports. Ministry of Economy, Trade & Industry forecasts special steel demand decreases by 1.3% to 4.97 million tonnes for October-December from the previous quarter when automobile output is likely to decrease. Special steel bar demand may be impacted by decreasing export mainly for automobiles.