Large Steels Capacity Down against After-Quake Demand Rebound in Japan

Steel production capacity is significantly shrinking in eastern Japan due to big earthquake and steel demand is also temporarily decreasing. Japanese steel makers are cautiously watching supply and demand balance. Demand for some steel items is likely to increase when domestic industries restart normal operations and damage repair commence.

Production sites of Japanese industries, including automakers, electric appliance makers and shipbuilders, are damaged in eastern Japan. Toyota Motor decided suspension of all domestic assembly plants for March 14-16. Other major car makers have also stopped their operations due to component supply troubles. After the present confusions, car makers and other large manufacturers will restart normal operations.

Meanwhile, orders for structural steels, such as H-beam, sheet pile, prefabricating steel and rail, should increase soon. Structural steel would be used in post-quake constructions and damage repair works though current market demand was weak for construction materials.

Currently, Nippon Steel’s Kamaishi works, Tohoku Steel Corporation, JFE Bars & Shapes’ Sendai plant, Itoh Iron & Steel’s Ishinomaki plant and Tokyo Tekko’s Hachinohe plant are damaged and suspended. These plants are unlikely to return to normal operation in the short term. Sumitomo Metal Industries’ Kashima works has stopped all production lines since some facilities were damaged by earthquake. Kashima’s operation is also unlikely to recover in the short term.

Japanese large-lot steel consumers including automakers, electric appliance makers and general contractors, seem to have started to ask multiple material suppliers for substitute steel supply. Several sources of Japanese integrated steel makers showed very positive intentions to help damaged companies.