Japan Raw Steel Demand to Drop in Oct-Dec, METI

Japanese raw steel demand for steel shipment will decrease by 1.5% to 26.98 million tonnes in October-December from July-September, which is the first drop in 2 quarters, announced by Ministry of Economy, Trade and Industry on Wednesday. METI expects the production decreases due to lower domestic automobile sales, lower steel export under higher yen rate and inventory adjustment. The ministry expects the demand of steel products will decrease by 0.9% to 23.84 million tonnes, which decreases for 3 quarters in a row. METI warns Japanese steel makers should adjust the production to reduce the inventory to normal level while the makers should be cautious for potential downward risk in offshore market and exchange rate.

METI expects the domestic demand of steel products decreases by 0.9% to 15.42 million tonnes in October-December from July-September due to lower automotive demand. The ministry estimates the carbon steel demand will decrease by 7.3% to 2.61 million tonnes for automobile. METI expects the demand will increase by 14.4% for civil works during the demand season.

METI expects the steel export will decrease by 0.7% to 8.42 million tonnes in October-December from July-September, which decreases for 3 quarters in a row. METI warns Japanese makers should watch Chinese move including the makers’ production cut and demand for manufacturers.

METI estimates domestic inventory of carbon steel products is 4.88 million tonnes at makers and distributors at end of September. The ministry warns the inventory level with 1.22 months of the shipment is higher than expected. METI expects the makers adjust the output to reduce the inventory, especially for sheet steel products.

Japanese raw steel output would reach 100 million tonnes for the first time in 2 years when METI’s outlook represents the annual output will increase by 24.5% to 108.9 million tonnes in 2010 from 2009.