Japan Raw Steel Output to Keep Historical Low in April-June

Japanese raw steel output is expected to keep less than 20 million tonnes for April-June as January-March. Japanese integrated steel makers cannot increase the production due to inventory adjustment for semi-finished and finished steel products while automakers and other users plan indicate better production level from the recent bottom. The raw steel production recovery could be in July-September depending on export market and electric furnace steel makers’ activity.

The raw steel output decreased by 38% to 6.37 million tonnes in January from a year earlier. The production decreased by 44% to 5.48 million tonnes in February. The production is low level in March as February and expected to around 18 million tonnes in January-March, which is the 40-year low.

The steel demand decreases in April-June from January-March due to slower activity of automobile and civil works. However, the demand would increase from very low level in January-March when the inventory adjustment progresses in automobile and machinery industry.

Japanese integrated steel makers expand the production cut since November 2008 and reduced the output by around 40% in February from a year earlier. However, the production cut is not enough for low level steel demand and some makers build inventory in slab and bloom.

Japanese electric furnace steel makers also expand the production cut to around 50% in February from a year earlier. Some makers increase the production from the bottom but the increase is expected to limited.

Japanese inventory was 5.77 million tonnes for carbon steel and 4.73 million tonnes for hot, cold and coated sheet steel at end of January. The inventory is estimated to decrease in February but the adjustment could take more months.