Japan Raw Steel Output to Rise by 10.5% to 25.775 million tonnes in Oct-Dec

Japanese makers plan to increase the by 10.5% to 25.775 million tonnes in October-December from July-September, announced by Ministry of Economy, Trade and Industry on Friday. The output reaches 25 million tonnes for the first time in 4 quarters and 1.4% higher than same period of 2008. The output is, however, 5.9% higher than steel demand outlook of 25.28 million tonnes estimated by METI.

The production increases in October-December when the carbon steel export will reach record high level of 6.92 million tonnes and the domestic demand improves for automobile and construction machinery. The raw steel output increases by 2.1 million tonnes for integrated steel makers, by 220,000 tonnes for electric furnace carbon steel makers and by 220,000 tonnes for electric furnace special steel makers from July-September.

The raw steel output reaches 87.7 million tonnes in calendar year 2009, which is 26.2% lower than 2008. The output decreases to less than 100 million tones for the first time since 1999 and the lowest level since 1970. The special steel output reaches 13.321 million tonnes in 2009, which is 38.8% lower than 2008 and the lowest level since 1983.

METI concerns uncertainly for the steel market. METI expects the electric furnace steel makers could reduce the output when ferrous scrap market price decreases from the recent peak. METI also warns Japanese steel makers should be cautious for Asian export condition when increasing Chinese steel production could impact on Asian steel market. METI is prepared for additional research for the output plan depending on the makers’ review for the output plan.

The domestic plate demand increases in October-December due to higher demand for construction machinery after the long lasted inventory adjustment while automobile output keeps improving sheet and special steel demand. However, METI sees construction market is still very slow for condominium and building construction, which impacts output for concrete reinforcing steel bar.

The export demand for Japanese steel makers will hit record level for carbon steel in October-December. METI sees, however, the offshore demand is also uncertain when stimulus package in Asian countries could fade out after aggressive expenditure.

The special steel demand is improving for automobile, construction machinery and export for energy industry. The demand will increase for major special steel items including mechanical carbon steel products while the export increases mainly for high tensile steel while stainless export will decrease under peaking nickel ingot price.