Japan Integrated Steels to Reduce Sheet Output for Jan-Mar

Japanese integrated steel makers will intensively reduce steel sheet outputs for January-March 2009. The makers are seriously concerned about increasing Japanese steel sheet inventory, which reached 4.47 million tonnes at the end of October when automobile or machinery production remarkably slowed down. The makers aim to reduce steel sheet inventory to around 4 million tonnes until the end of March 2009.

Nippon Steel plans to decrease sheet production by above 2 million tonnes until the end of March 2009, JFE Steel by 1.5 million tonnes, Sumitomo Metal Industries by 500,000 tonnes and Kobe Steel by above 600,000 tonnes. They may implement additional output reductions.

Japanese sheet steel inventory including hot, cold and coated products had increased by more than 400,000 tonnes from July to October. Dealers and coil centers’ inventory increased for 8 consecutive months when users, such as automakers or component makers, are advancing the adjustment of the inventory. In November, the inventory is expected to increase even more.

The demand is likely to keep downward trend when automakers are aggressively cutting the outputs. Steel sheet import volume is increasing due to higher yen rate. Makers’ inventory adjustment seems to be extended. A Japanese integrated steel source said the inventory adjustment by users is prospected to show some result within this year. They will adjust the dealers and coil centers’ inventory by the output reduction from December.