Tight Japan Plate Supply with Higher Demand, Limited Supply

Japanese steel plate supply is getting tighter when the offshore demand recovers for construction machinery and energy industry while the domestic demand started to recover for major building construction. The makers increase the production level to meet higher demand but they cannot meet all of the demand immediately partly due to production trouble.

The domestic production increased by 9.6% to 3.092 million tonnes in January-March from October-December 2009. The export demand increased by 5.0% to 1.055 million tonnes when the export has kept around 350,000 tonnes per month since July 2008 while the domestic demand is quarterly 1.8-2.1 million tonnes or 600,000-700,000 tonnes.

The plate demand for construction machinery recovers when the machinery demand increases for China and India. The demand level is around 70-80% of the peak in first half of fiscal 2008 started April 2008. Japanese plate supply also increases for the applications.

The plate demand increases for energy industry since January. Japanese industry expects the demand will keep high for UOE pipe to line pipe and heavy electric machinery under worldwide higher demand for energy.

The domestic plate demand also recovers recently when developers restart major redevelopment projects in metropolitan areas including Tokyo. The steel demand for building structure will increase slightly in fiscal 2010 from fiscal 2009 when the demand is expected to be accelerated in second half of fiscal 2010.

Supply impacts from new plate mill capacity in South Korea and China is limited to the offshore market so for while the capacity could impact on the market sooner or later. The domestic tight supply could continue for months when the domestic shipbuilding plate demand drop is limited at around 4-5% in fiscal 2010 from fiscal 2009.