Japan Raw Steel Output to Rise Marginally in April-June

Japanese steel makers plan to produce 18.294 million tonnes of raw steel in April-June, which is 4% higher than January-March and 41.1% lower than same period of 2008, announced by Ministry of Economy, Trade and Industry on Friday. The output in the first quarter of fiscal 2009 started April is the second low as first quarter in the record since fiscal 1968.

The production plan is 2.6% higher than 17.83 million tonnes of demand in the quarter estimated by METI. The production increases from January-March when the makers increase the semi-finished steel export and build inventory to meet demand in the summer while the demand is very slow for construction and industrial machinery, construction and private capital expenditure but finished car inventory adjustment progresses.

The output decreases by more than 100,000 tonnes for integrated steel makers in April-June from January-March while the output increases by more than 500,000 tonnes for electric furnace steel makers and by near 300,000 tonnes for special steel makers. The total raw steel output will be less than 20 million tonnes for 2 quarters in a row, which is the first time since fiscal 1968.

The carbon steel output in April-June is in line with January-March due to inventory adjustment for automobile and the parts. The production of H-beam and small bar is likely to increase by electric furnace steel makers when the market price shows sign to hit bottom despite of the slow demand. The special steel products output increases under better automotive demand from the bottom in January-March but the special steel makers are still cautious for major production increase.

METI sees the steel makers’ production plan for April-June is cautious for better supply balance. METI keeps watching the inventory adjustment activity for each industry when some industries still need aggressive adjustment. METI concerns the plate steel inventory increases while hot, cold and coated steel sheet inventory decreases from the peak. METI warns the plate makers should reduce the inventory when the demand could keep low level for machinery and building despite of the firm demand for shipbuilding.