Japan Electric Furnaces’ Crude Steel Output Hits Historical Bottom in Jan.

Crude steel production has plunged at Japanese electric furnace steel makers since autumn 2008 and hit the historical bottom in January 2009. Japanese electric furnaces’ carbon steel production decreased by 41.6% to 995,420 tonnes in January from a year earlier, which became below 1 million tonnes for the first time since December 1975. Their special steel output dropped by 57.9% to 288,487 tonnes in January from a year earlier, which represented year-on-year minus for 5 straight months.

Japanese electric furnaces’ carbon steel production kept 1.6-2 million tonnes per month in a recent few years. However, the output has shown 2-digit year-on-year decline since October 2008 and became less than a half in January 2009 compared with the current peak of 2.03 million tonnes in June 2008.

Steel demand is weak from construction market in economy recession. Additionally, market price of steel products keeps downtrend and, as a result, general contractors are minimizing material procurement as much as immediate consumption. Electric furnaces continue wide-range output cut in February and March. The demand is unlikely to recover in a short term.

Special steel production by Japanese electric furnaces had kept around 700,000 tonnes per month since October 2007. The output reached 766,000 tonnes in June 2008, the peak in recent years, thanks to the strong demand from automakers, construction and industrial machine makers.

However, these customers entered severe inventory adjustment in and after autumn. Electric furnaces’ special steel output became below 300,000 tonnes in January, the historically low level. Meanwhile, some concerns expect the demand would hit the bottom soon to follow users’ operation recoveries. For instance, Toyota Motor is expected to increase daily car production in and after May 2009.