Japan’s Steel Industry Forecast for Jul-Sep’18 Quarter: METI

Japan’s METI (Ministry of Economy, Trade and Industry) has recently released country’s crude steel estimates and demand outlook for the second quarter (starting from July to September) of FY18.

Japan’s crude steel output likely to increase

According to the forecasts, country’s crude steel production in Q2 FY18 is estimated to be around 26.54 MnT, an increase of 2 to 3% compared to the corresponding quarter of last fiscal. If quarterly comparison is done, the same is likely to record a rise of about 1% in the upcoming Q2 quarter of FY18.

The surge in Japan’s crude steel production forecast reflects Japan’s strong domestic and overseas demand. Koji Komiyama, metal section chief of the METI commented that “demand environment continues to remain strong both in Japan and abroad supporting crude steel output rise in July-September quarter. However, he has pointed towards the rising need of proper inventory management system in Japan to manage the increase in the country’s steel demand and output.

After the imposition of U.S tariffs on steel imports with effect from Jun’18, although there is anxiety in the market and the trade war between major economies like U.S. China, and EU have intensified, the global steel demand environment continues to remain strong.

Also, Japan’s industry ministry has mentioned that the import tariffs announced by U.S. and the countermeasures taken by various other economies have not been factored into the forecast. Komiyama said that at present stage any dramatic impact of U.S. tariffs is unlikely and that the country is carefully watching the entire situation.

Positive steel demand outlook for Q2 FY18

According to the METI’s forecast, Japan’s total steel demand for Q2 FY18 is likely to increase marginally by 1% Y-o-Y basis to 23.75 MnT. Out of the total steel requirement, the demand for ordinary steel is likely to be at 18.68 MnT (up 0.7% Y-o-Y basis) thus continuing the rising trend.

Looking at the sectoral consumption of ordinary steel, the demand from the manufacturing sector is likely to increase by 1.5% Y-o-Y basis to 7.04 MnT. For the automotive sector, the strong outlook for finished car exports and the exports of knock-down units (automobile units exported in parts) will also support the country’s steel consumption.

Steel demand in the manufacturing sector is also anticipated to increase on a y-o-y basis because steady movements are expected in demand of industrial machinery. The demand for construction machinery, transportation machinery and machine tools is also anticipated to remain firm in Q2 FY18.

METI’s Quarterly Steel Demand Forecast for Japan in FY17 and FY18