Slower Japan Steel Plate Demand in April-June

Japanese steel plate demand is expected to only around 3 million tonnes in April-June due to slow demand after the major earthquake. The demand decreased in March especially in construction and industrial machinery for Tohoku area after the quake while the domestic plate demand was around 20% higher in fiscal 2010 than fiscal 2009 level. The demand is estimated to be lower in January-March than 3.2 million tonnes in October-December 2010 with 2.24 million tonnes in domestic market and 960,000 tonnes for export. The demand keeps low for April-June when the rebuilding demand starts in and after July.

The demand decreases in April-June especially for construction and industrial machinery due to damage by the quake. Japanese major plant of construction machinery in coastal area around Tokyo resumed operation after the stoppage. However, the operation rate was only 50-60% in April due to limited parts supply along with the direct damage. The operation improves gradually and reaches normal level in May. Some Japanese steel industry sources expect the plate demand for construction machinery is 30-40% lower in April-June.

The plate demand for construction decreased especially in Tohoku. The demand decreases when building activity slows while the demand weight is small for the total plate demand. The demand is expected to increase for rebuilding activity in the damaged areas in civil work and bridge construction.

The shipbuilding plate demand is expected to be flat or slight lower in fiscal 2011 than fiscal 2010 level. Japanese shipbuilders keep same level of order in fiscal 2011 as fiscal 2010. The shipbuilding level is estimated to be near 20 million gross ton in fiscal 2011 as fiscal 2010. However, the activity would slow when their order backlog decreases. The activity is normal with healthy pars and materials supply even after the quake when the major plants are located in western Japan.

The steel plate export is firm due to strong offshore demand. The export level keeps monthly 300,000 tonnes level recently partly due to strong demand for South Korean shipbuilders. The plate demand is strong for Japanese plate makers from buyers in South Korea and other Asian countries. The buyers still seek Japanese high grade plate for shipbuilding and construction machinery while Asian steel makers expand the output capacity to meet growing demand for construction and construction machinery.

Japanese plate supply decreases after the quake due to temporarily shipment stoppage from Kashima works of Sumitomo Metal Industries after the quake while Kashima works resumed the plate mill operation and shipment. Other makers have limited room to increase the supply when they operate at full capacity.

The plate import increases recently. The import reached 30,000 tonne in February and March while the import was more than 20,000 tonnes since September 2010 when the buyers try to increase the import under tight supply and higher price from domestic makers. The import increases from South Korea where major makers expand the output capacity. Japanese plate supply would get tighter when the demand increases for rebuilding activity for the damaged area.