According to the data released by JISF (Japan Iron and Steel Federation), the demand for Japanese steel fell 12.4% y-o-y basis to 5.1 MnT in Sep’18, mainly due to the smaller appetite of Japan’s manufacturing sector.
Manufacturing steel demand in the country fell 10.5% to 1.51 MnT during the month. The country’s manufacturing sector has performed not-so-well in the third quarter of 2018 due to weak export demand and tepid investments amid U.S.-China trade war. While new business grew at a much weaker rate and was broadly flat, export demand, despite further yen depreciation, deteriorated.
Demand from the Japanese automotive sector fell 13.2% to 699,000 tonnes, while that from marine equipment makers increased 13.2% year on year to 332,000 tonnes.
Total construction steel demand decreased by 3.2% to 935,000 tonnes. This includes demand from civil engineering works, which rose 10.3% year on year to 198,000 tonnes.
Steel demand from the non-residential segment fell 7.8% year on year to 362,000 tonnes while that from the residential segment increased by 3% to 164,000 tonnes. But collectively, demand for steel from both the residential and non-residential building sectors fell 4.7% on the year to 526,000 tonnes.
| Sectors | Sep’17 | Sep’18 | Y-o-Y change |
| Japan’s total steel demand | 5.82 | 5.10 | 12.4% |
| Manufacturing | 1.68 | 1.51 | 10.5% |
| Automotive | 0.81 | 0.70 | 13.2% |
| Marine equipment | 0.36 | 0.32 | 13.2% |
| Construction | 0.97 | 0.94 | 3.2% |
| Residential-Non-residential | 0.56 | 0.53 | 4.7% |
Source: JISF
Japan’s domestic steel consumption totalled 3.49 million tonnes in September, down 9.1% year on year. Japanese steel exports fell 18.8% to 1.61 million tonnes in September on weaker overseas demand.
However, as per the latest updates, Japan’s goods-producing sector began the final quarter (Oct-Dec) of 2018 in growth territory. The Nikkei Japan Manufacturing Purchasing Managers’ Index, or PMI, increased from 52.5 in September to 52.9 in October. Readings above 50 indicate an expansion, while those below 50 indicate a contraction. Due to this, it is being believed that Japan’s steel demand trend for the fourth quarter is likely to be positive, unlike the previous quarter.
Nonetheless, industry experts are of the opinion that whether this upturn in the fourth quarter is the start of a new trend or it is a transitory response to September’s weather-impacted performance (due to typhoon Jebi) is remained to be seen.
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