Japan’s crude steel production stood at around 8.1 million tonnes (mn t) in Sep’21, rising by 2.8% compared to Aug and 25.6% from Sep’20, as per data from the Japan Iron and Steel Federation (JISF).
In the Jan-Sep period this year, Japan produced 72.1 mn t of crude steel, up nearly 18% year-on-year. As per data published by Japan’s Ministry of Economy, Trade and Industry, crude steel production was recorded at 24.11 mn t – an estimated increase of 0.8% – in the Jul-Sep period. This is an increase of 9.6% from the same period of last year, marking the third consecutive quarter of positive growth.
Demand for steel remains strong, but there are many downside pressures in the market such as the impact of the new coronavirus strain, impact on automobile production due to semiconductor shortage, and restrictions on electricity usage in China.
Steel demand surges
According to the Ministry, “the risk of downside may increase”. Demand for steel products in the Oct-Dec’21 period will be 17.14 mn t for ordinary steel and 4.7 mn t for special steel, for a total of 21.84 mn t, up 2.6% from the previous year’s forecast and 6.7% from the same period of the previous year.
Of ordinary steel products, domestic sales were 11.34 mn t, up 4.6% year-on-year. Looking at estimated domestic consumption, it was 6.43 mn t for the manufacturing industry, up 10.3% from the previous year, and for construction (building/civil engineering) consumption was down 2% from the previous year.
While demand for construction steel products is sluggish due to seasonal factors, demand for manufacturing products is increasing. Construction steel demand increased by 1.6% but manufacturing steel demand increased by a modest 0.5%, y-o-y.
Auto output may decline
For automobiles, there is a strong possibility that domestic finished vehicle production and knockdown exports will decrease, y-o-y, due to the disruption of the supply chain for parts procurement. As a result, demand for ordinary steel products for automobiles is expected to decrease slightly, y-o-y.
The shipbuilding sector is recovering and many new construction projects are there for next year. Demand for exports of ordinary steel products is expected to be flat. As the influence of COVID-19 continues in Southeast Asia, which is a major export destination, it is highly likely that it will remain at the same level as Jul-Sep.
China’s steel exports in Aug declined month-on-month, but are still at a high level. If exports increase again, it could affect Japan’s steel exports. According to the Ministry, “it is necessary to pay close attention to China’s recent efforts to reduce production and the impact of power constraints on the Chinese economy.”
Expected CY’21 crude steel output – 96 mn t
Crude steel production in 2021 is expected to reach 96.1 mn t, according to the Ministry an increase of 16% compared to 2020. On a calendar year basis, it will be positive for the first time in two years, but it has fallen below 100 mn t for the third consecutive year.
Crude steel production on a calendar year basis remained in the 104 mn t range from 2016 to 2018. It fell below 100 mn t due to decrease in exports due to the US-China trade conflict and the influence of the coronavirus. Although the recovery continues, current production levels are still lower compared to the 2016-2018 period.
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