Japan Major Steels to Cut Domestic Sheet Steel Supply

Japanese integrated steel makers apparently revise the sheet steel output plan for domestic market downward for October-December. Japanese hot, cold and coated sheet steel inventory held by makers, distributors and processors decreased by 1.2% or 52,000 tonnes to 4.198 million tonnes for domestic market at end of September from August, which was first drop in 3 months. The drop was only 50,000 tonnes level due to very slow building demand due to transition process for new building standard law though the inventory normally decreases by around 110,000 tonnes toward demand season. Nippon Steel started the revising process for output plan in October-December after the firm reduced the domestic sheet shipment by around 100,000 tonnes in July-September. The firm tries to find the actual domestic demand condition to avoid overstock. Japanese integrated steel makers expected the domestic sheet demand would increase in July-September from April-June when automakers increased export. The steels tried to reduce the domestic sheet inventory to around 4 million tonnes level in September through some adjustment. However, building starts decreased by around 20% in July and by around 40% in August from a year earlier level in floor space, according to Ministry of Land, Infrastructure and Transport. The building activity is very slow due to stricter building permitting process under new building standard law started in June. The steel demand decreases and the sheet steel inventory increased by 200,000 tonnes compared with expectation by integrated steels. Some market interests see the higher stock is caused by overproduction by makers. The makers’ hot, cold and coated sheet inventory for domestic market decreased by 52,000 tonnes or 2.8 to 1.791 million tonnes at end September from August. The stock was flat at 837,000 tonnes for distributors and at 1.569 million tonnes for processors while the stock usually decreases by 70,000 tonnes for makers and by 20,000 tonnes each for distributors and processors. The cold rolled flat steel inventory decreased by 29,000 tonnes or 3.7% to 740,000 tonnes and the coated steel stock decreased by 22,000 tonnes or 1.7% to 1.251 million tonnes while the hot rolled flat steel stock was flat at 2.207 million tonnes.