Japan Raw Steel Output to Hit Historical Low in January-March

Japanese raw steel production decreases to 19.262 million tonnes in January-March, which is 27% lower than October-December and 37.5% lower than same period of 2008, according to steel makers report to Ministry of Economy, Trade and Industry announced on Friday. The production is the lowest level since fiscal 1970 ended March 1971 when Nippon Steel was formed by Yawata Steel and Fuji Steel. With the low operation, the annual production decreases by 27% to 107.16 million tonnes in fiscal 2008, which is the first drop in 3 years.

The quarterly production hits the widest drop in January-March both from previous quarter and same period of previous year and is the lowest level since January-March 1969. The production is 1.838 million tonnes lower than estimated demand, which METI announced in December.

The quarterly production decreases by around 5 million tonnes for integrated and by around 1.4 million tonnes for electric furnace carbon steel makers in January-March from October-December. The production could decrease more reducing the annual production to less than 100 million tonnes in fiscal 2008.

The production decrease by more than 15 million tonnes in second half of fiscal 2008 from the record 61.51 million tonnes in the first half year.

The annual production deceases by 25% to 74.16 million tonnes for carbon steel products and by 35% to 19.38 million tonnes for special steel products.

METI sees the steel makers try to reduce the production in January-March to meet slower demand when automakers and other users reduce the activity. METI expects the supply balance could improve due to the major production cut by steel makers including stoppage of blast furnaces while domestic inventory of hot, cold and coated sheet steel reached record 4.7 million tonnes at end of December.