Japan’s crude steel output is likely to increase in FY23 as against FY22, as per the Japan Iron and Steel Federation (JISF). It is anticipated that demand from overseas market will be sluggish. However, a marginal increase is expected due to steady domestic demand, said Chairman Yoshihisa Kitano, President of JFE Steel at a press conference.
Exports will struggle to recover in the next fiscal due to three major factors:
- Rising raw material and fuel costs due to the Ukraine crisis
- Concerns about a slowdown in the global economy
- Supply constraints of automobile parts amid supply chain disruptions.
Domestic steel demand is expected to be around 56.1 million tonnes (mnt) in FY23, up 1% as compared to current fiscal year. Demand is expected to increase from civil engineering, construction, and machinery sectors. Automobile sales are also expected to improve, still the recovery will be limited, as supply-side constraints have not been completely resolved and sluggish growth in exports of finished vehicles will continue.
Moreover, shipbuilding exports are also expected to decline y-o-y amid concerns about a slowdown in the global economy.
Steel exports in the current fiscal year will decline for the first time in two years, also in ASEAN due to sluggish demand and the deterioration of the export environment caused by the spread of protectionism.
Crude steel production in FY19 fell below 100 mnt for the first time in 10 years, when the export environment deteriorated. In FY20, the same was 82.78 mnt when the coronavirus pandemic occurred, falling below 90 mnt for the first time in 49 years. Although it recovered to 95.64 mnt in FY21, but slowed down again in FY22.
Although domestic demand is expected to increase in FY23, but recovery to 100 mnt is not expected. Depending on developments in demand for exports, there is a possibility that production cuts may appear.
Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.
Leave a Reply