Japan Steel Demand to Drops by 31.4% in April-June, METI

Japanese steel demand will decrease by 31.4% to 18.58 million tonnes in April-June from same period of 2008, announced by Ministry of Economy, Trade and Industry on Friday. METI expects the demand represents 17.83 million tonnes of raw steel output, which is 42.6% lower than same period of 2008. METI expects the demand is bottom in January-March when some users succeed to reduce inventory and the stock adjustment improves in Asian market while the steel demand is still low level for April-June.

The estimated raw steel output, which hits less than 20 million tonnes as April-June for the first time since 1969, increases in April-June from January-March, which is the first increase in 4 quarters while the output decreases in year to year for 3 quarters in a row.

METI expects the carbon steel demand decreases by 7.7% for domestic construction in April-June from January-March despite of Haneda airport expansion. METI expects domestic manufacturers expand the production cut to reduce inventory of machinery while automakers are progressing inventory adjustment. METI expects the carbon steel demand for manufacturers increases by 1.9% in quarter to quarter. METI expects some manufacturing sectors will finish inventory adjustment in July-September while the construction demand is supported stimulus package.

METI sees positive sing for the supply balance when domestic steel inventory decreases for hot, cold and coated sheet and H-beam. METI expects integrated steel makers would keep low level production for better supply balance. METI expects the steel inventory at makers and distributors decreases by 200,000 tonnes at end of June from March end.

METI warns plate steel inventory increases at distributors under uncertainty for machinery demand. METI concerns steel buyers would hold the order until key annual contract prices are fixed for major raw materials and steel products.