Japan Raw Steel Output to Rise by 3.1% in October-December

Japanese raw steel output will increase by 3.1% to 28.202 million tonnes in October-December from July-September, which reaches the highest level after Lehman shock, announced by Ministry of Economy, Trade and Industry on Friday. The output is 4.5% higher than the demand estimated by METI when the output increases after production trouble at blast furnace and summertime maintenance outage during July-September. However, METI warns the production could be too high at current inventory level when Japanese economy slows and Chinese and Southeast Asian economy could slow down.

Japanese steel demand started to decrease when automobile sales decreases after termination of eco-friendly in September while export of automotive knockdown set is still high level under strong offshore demand. The production of steel products will increase by 2.1% or 500,000 tonnes to 24.245 million tonnes in October-December from July-September.

The raw steel output will increase by 850,000 tonnes in October-December from July-September. The higher output than output level of steel products is apparently due to the integrated steel makers’ extra transaction of semi-finished steel after support shipment during blast furnace trouble along with inventory building.

The output of carbon steel products is high at 18.873 million tonnes in October-December and the domestic production is the highest level since 2008. Domestic electric furnace steel makers increase the output while the integrated steel makers reduce the output under lower automobile output.

The output of special steel products will increase by 4.2% to 5.372 million tonnes in October-December from July-September. The output hits the highest level after Lehman shock when they are still getting strong order from automobile industry under lower finished car output and strong knockdown sets output. The demand is also strong for industrial and construction machinery along with strong export for Asian automobile and energy industry.

However, the inventory was higher than usual both for carbon steel and hot, cold and coated sheet steel at end of September while the stock usually decreases in September. METI warns the higher output could result in higher inventory.

Japanese government revised the economy status downward to standstill at the monthly economic report in October. METI reported on Friday the industrial production appears to be weakened. Japanese export situation gets severer with slowing Chinese economy, slowing recovery pace in US and European economy and higher yen rate. METI warns Japanese steel makers should adjust the production to meet demand condition while the steel makers’ plan is still optimistic.