Japan Sheet Steel Supply to Get Tighter After October

Japanese sheet steel supply could get tighter in October-December after the oversupply condition in April-September. The automobile output is expected to increase after production loss due to earthquake in July while the demand increases for appliances and export despite of uncertainty for domestic building demand. An integrated steel maker source said the hot rolling capacity is still tight while the downstream capacity has room for output increase after expansion in years. Japanese automobile output increased by 0.1% to 5.71 million units in January-June from same period of 2006, which was increases for 6 years in a row. The industry experienced more than 100,000 units of production loss due to earthquake in July. However, the automakers increase the output in October-December to cover the loss. The export demand is likely to keep firm from South Korean rerollers and buyers in Middle East. The domestic hot, cold and coated sheet steel inventory increased to 4.07 million tonnes at the end of June, which was more than 120,000 tonnes higher than May and higher than normal level of 4 million tonnes. The inventory is expected to increase in July and August due to slower demand seasonally. Japanese integrated steel makers try to reduce the inventory through shipment cut for the distributors’ market.