Hot-Dip Galvanized Steel Sheet Supply to Tighten Severely in Japan

Supply of hot-dip galvanized steel sheet for automobile would tighten more than the present in Japan toward March 2007, when Japanese auto production maintains active mainly for export. Integrated steel maker source estimates Japanese auto production could reach to 5.7-5.8 million units in the half year to March 2007, increasing by 150,000-200,000 units from the half year to September 2006. Integrated steels are concerned whether they can supply enough hot-dip galvanized steel sheet against the high pace output expansion by Japanese auto makers even though the integrated steels has expanded their productive capacities.Japanese integrated steels plan to increase their continuous galvanizing lines (CGLs) to expand the supply volume of hot-dip galvanized steel sheet for Japanese increasing auto production. Nippon Steel started operation of new CGL at Kimitsu works and will also start the operation at Nagoya works in September 2006 and Oita works in December 2006. Sumitomo Metal Industries will start operation of new CGL at Kashima works in December 2006 and JFE Steel will also start in Fukuyama area of West Japan works in January 2007.However, the integrated steels need to acquire approvals from the auto makers in order to start commercial supply of hot-dip galvanized steel sheet. The approval acquirement usually takes about a half year after new CGLs start operation. Then the new CGLs of Japanese integrated steels can start practical production during the first half year of 2007. The official of JFE Steel said that Japanese auto production surely increases by more than 600,000 units through 2006 from 2004 when the steel sheet supply became extremely tight and that the delivery of hot-dip galvanized steel sheet could significantly tighten again toward March 2007 when the integrated steels cannot operate the new CGLs for commercial production.