Japan: Steel production projected to dip 2% y-o-y in Q4CY’25

• Steel demand forecast to drop for 8th consecutive quarter
• Ordinary steel export demand expected to decline 7% y-o-y

Japan Metal Daily: The Ministry of Economy, Trade and Industry (METI) has announced the steel demand forecast for the October-December period (Q4CY’25). According to the forecast, crude steel production, equivalent to demand, is expected to remain at a low level, with 20.23 million tonnes (mnt). This represents a 1.2% y-o-y increase compared to the previous fiscal year and a 2.4% y-o-y decrease compared to the same period last year. This marks the eighth consecutive quarter of y-o-y decline.

Demand outlook

Demand for steel products continues to be sluggish both domestically and internationally, with production activities of steel manufacturers likely to remain sluggish in the future. Demand for steel in the October-December period is expected to be at 18.47 mnt, including 14.72 mnt of ordinary steel and 3.75 mnt of special steel.

The projected crude steel production for CY’25 is 80.76 mnt, factoring in the demand outlook. This is a decline of approximately 4% y-o-y. While it narrowly keeps production in the 80-mnt range, this will mark the fourth consecutive y-o-y drop.

Ordinary steel demand

The demand for ordinary steel products is expected to be 14.72 mnt. This breaks down into 9.52 mnt for domestic use, down 1.9% y-o-y, and 5.2 mnt for export, down 6.7% y-o-y. Domestic sales are expected to remain steady compared to the previous fiscal year, but exports are likely to face stagnation.

Sector-wise performance

Consumption of ordinary steel for domestic use is sluggish across various sectors. Consumption by the construction sector has declined by 3.2% y-o-y, while that by the manufacturing sector has decreased by 0.9% y-o-y. The automobile sector is also expected to see a decline, with demand forecasted to be at 2.41 mnt, down 1.6% y-o-y.

Export challenge

Export demand for ordinary steel is expected to decline by nearly 7% y-o-y. This decline is attributed to several factors, including the decline in market share of Japanese automakers in China, an economic slowdown in ASEAN, and the spread of trade measures in various countries and regions. These factors are likely to push down export demand.

Impact of US tariffs

The US government has imposed a 50% additional tariff on steel and aluminium imports, including derivatives, under Section 232 of the Trade Expansion Act. However, the impact of these tariffs on Japan’s steel demand has been negligible so far. According to Manabu Nabeshima, Director of the Metal Industries Division at METI, the ministry is closely monitoring the situation, but the major impact has not been factored into the current forecast.

Outlook

The short-term outlook for steel demand appears challenging, with sluggish domestic consumption and weak export growth expected to persist. Declines in key sectors such as construction, manufacturing, and automobiles will likely weigh on demand, while economic uncertainty and trade measures may further impact export prospects. As a result, steel demand is expected to remain muted in the near term.

Note: This article has been written in accordance with a content exchange agreement between BigMint and Japan Metal Daily.