- Weak construction, auto sector activity to weigh on steel consumption
- Trade protectionism continues to cloud Japan’s steel export outlook
Japan Metal Daily: Japan’s domestic crude steel production is expected to remain broadly unchanged y-o-y at around 80 million tonnes (mnt) in FY’26, according to the steel demand forecast released by the Japan Iron and Steel Federation (JISF) on 25 December. The projection reflects the impact of subdued domestic demand, alongside export-related uncertainties, driven by trade-related factors.
Domestic demand to remain flat in FY’26
The federation expects overall steel demand in Japan to stay largely flat in FY’26, with limited signs of recovery across key consuming sectors.
Construction sector: Domestic demand from the construction sector is forecast to remain broadly in line with FY’25 levels. While civil engineering demand may see a marginal uptick, supported by increased public works reserve funds, this is likely to be offset by weaker building construction activity amid persistent labour shortages and rising material costs.
Manufacturing sector: Steel demand from manufacturing is expected to remain subdued in FY’26, with automotive-related demand projected to decline y-o-y. In addition to the direct impact of US tariff policies, Japan’s steel demand is likely to face indirect pressure from China’s continued push to export electric vehicles (EVs) into ASEAN markets, potentially weighing on regional production and steel consumption.
Exports expected to inch down
Steel exports are forecast to edge down y-o-y in FY’26. Reflecting on FY’25, JISF Chairman Tadashi Imai, President and COO of Nippon Steel, described it as “a year swayed by trade issues.” He noted that tariff measures under the Trump administration have continued to tighten, posing significant challenges for Japan’s export-oriented steel industry.
He also highlighted that, amid China’s structural overcapacity, Japan is increasingly being affected by trade actions implemented by countries and regions targeting Chinese steel exports, a trend he expects to persist and remain a key challenge in the coming year.
Outlook
Japan’s steel market is expected to remain under pressure in FY’26, shaped by flat crude steel production, weak domestic demand, and slightly softer exports. On the external front, ongoing trade protectionism and spillover effects from China’s overcapacity are likely to continue weighing on export prospects. Overall, market sentiment is expected to remain cautious until clearer signs of demand recovery emerge.
Note: This article has been written in accordance with a content exchange agreement between BigMint and Japan Metal Daily.
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