Japan Raw Steel Output could Increase in F2006

Some Japanese steel industry interests expect the raw steel output will increase in fiscal 2006 started April from 5th high of 112.71 million tonnes in fiscal 2005. The export is recovering after inventory adjustment in offshore market while the domestic manufacturers keep the high level activity and Japanese private capital expenditure keeps high level. An integrated steel maker source said the steel supply keeps tight mainly for high valued products under when manufacturers consume steel more than last year both at home and abroad. Japanese raw steel output kept the high level at more than 110 million tonnes for 3 years. The output was 111.1 million tonnes in fiscal 2003, 112.9 million tonnes in fiscal 2004 and 112.71 million tonnes in fiscal 2005. The output was supported by growing demand mainly for high valued products to manufacturers including automobile and shipbuilding. Japan Iron and Steel Federation expected the domestic steel consumption would increase to 78.4 million tonnes including carbon and special steel in fiscal 2006 from estimated 77.9 million tonnes in fiscal 2005. However, the federation estimated the raw steel output would decrease by 400,000 tonnes due to lower export under slump in offshore market. The domestic steel consumption is higher after April than domestic interests expected while the inventory adjustment progresses for hot-, cold- and coated steel sheet. An integrated steel source said the inventory decreases at higher pace than expected while offshore buyers’ demand is very strong. The raw steel output could increase in fiscal 2006 from fiscal 2005 when the domestic consumption increases than original estimate and the export recovers. However, an integrated steel source said the demand could decrease in the second half of fiscal 2006 when offshore buyers try to purchase more than actual demand under expectation for higher price. The source also said the firm tries to keep the cautious attitude to avoid overstock of sheet steel as last year.