- Crude steel output to drop 0.4% q-o-q, 2% y-o-y
- Demand may inch up 1% q-o-q but fall 4% y-o-y
Japan Metal Daily: Japan’s Ministry of Economy, Trade and Industry (METI) has released its steel demand outlook for the July-September quarter, forecasting crude steel production at 20.11 million tonnes (mnt). This marks a 0.4% dip from the previous quarter and a 2.3% drop compared to the same period last year, signifying the seventh consecutive quarter of y-o-y decline. The persistent slowdown in both domestic and international steel demand is evident.
Impact of US tariffs on steel demand
METI’s Director of Metals Division, Nabeshima Manabu, expressed concerns about the potential impact of the high US tariff policy on steel demand. While many in the industry believe that the impact will not be significant in the first half of the year, METI will continue to monitor the situation closely. The reciprocal tariffs scheduled to be implemented in August may affect demand for industrial and construction machinery.
Steel demand outlook
Steel demand in the July-September period is forecast at 18.38 million tonnes (mnt), comprising 14.54 mnt of ordinary steel and 3.84 mnt of special steel. This represents a slight 1.1% q-o-q increase from the previous quarter but a 4.2% decline y-o-y. Demand for ordinary steel is expected to be 14.54 mnt (down 4.8% y-o-y, up 0.5% q-o-q), with that from domestic sources rising 0.6% y-o-y and 1.8% q-o-q to 9.54 mnt, while that from exports is likely to drop 2% q-o-q and 13.6% y-o-y to 5 mnt.
Ordinary steel consumption, exports
While the construction sector’s demand for ordinary steel may see a slight decline of 0.9% y-o-y in July-September, the manufacturing sector is likely to see a modest recovery with a 1.7% increase. However, this increase in manufacturing is largely attributed to a low base in the previous year, indicating that overall demand remains sluggish. The automotive industry, despite a recovery in production, is still impacted by slow sales and limited growth in knockdown (KD) sets.
Furthermore, ordinary steel exports are expected to experience a double-digit decline y-o-y, primarily due to continued weak demand from China and ASEAN countries, particularly within their automotive sectors. The METI emphasises the importance of closely monitoring supply and demand trends in China and the evolving US tariff policies.
Outlook
Japan’s steel demand is expected to remain sluggish in the short term, driven by weak buying interest in domestic and international markets. Exports will likely face headwinds from a slowdown in key global markets, while the domestic construction and automotive sectors will continue to face challenges. US trade policies will also pose uncertainty for the steel industry.
Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.
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