Japan Integrated Steels Reduce Crude Steel Output for Oct-Mar

Japanese 5 integrated steel makers will reduce crude steel output for Oct08-Mar09. They considered steel demand decreases along international financial crisis. Their output cut totals 2 million tonnes. They may additionally reduce the output if overseas steel demand becomes much weaker after January 2009.

The 5 makers’ crude steel output increased in the first half of fiscal 2008 from the same period of last year. Steel demand kept steady from manufacturing industries including automobiles or overseas markets despite of lower demand from building constructions. Japanese steel export increased by 8.5% to 20 million tonnes for April-September from the corresponding period of last year, which hit the record high.

But the demand trend changed in mid-September since financial crisis spread from USA to Europe and developing countries. Japanese automakers revised down the sales plans, and their domestic outputs seem to total below 11.79 million cars through fiscal 2008 from their initial plans at 11.8-12 million cars. Output growth is also weakening for industrial machineries and electric appliances.

Asian countries are impacted by economy downturn in USA. In South Korea, steel demand decreased significantly and steel makers are facing difficulty to purchase materials due to foreign exchange shortage. Because Chinese steel demand is decreasing, Chinese steel makers announced the output reductions. Japanese steel export is expected to decrease soon with higher yen rate.

Japanese crude steel production by the 5 integrated steels kept increase by fiscal 2007 for 5 consecutive years, while is expected to decrease in fiscal 2008. A source of Japanese integrated steel maker said their output reduction might continue in fiscal 2009.