- Weak demand continues to suppress production levels
- Ministry of Economy, Trade and Industry has announced the production plan
Japan Metal Daily: The Ministry of Economy, Trade and Industry (METI) flagged a persistent lack of momentum in the construction and manufacturing sectors and flagged concerns over China’s supply-demand imbalance and shifting US tariff policies, in the recently released production plans for the January-March quarter of 2026. Based on industry interviews, crude steel production is expected to reach 20.49 million tonnes (mnt), a marginal y-o-y increase of 0.4%.
Despite this slight uptick, the total output for FY’25 is estimated at 80.77 mnt, a 2.6% y-o-y decrease from the previous year. While this figure barely stays above the 80 mnt threshold, it represents the lowest production level seen since FY1970.
Steel demand remains stagnant on both a domestic and global scale, with no immediate signs of a production rebound. Forecasts for FY’25 suggest crude steel output will hit its second-lowest point since FY1968, falling roughly 2 mnt below the pandemic-era low of 82.78 mnt seen in FY’20.
While crude steel production is projected to recover slightly from the previous quarter’s (Oct-Dec) 20.21 mnt, it remains subdued at an annualised rate of approximately 83 mnt. Total steel output is expected to reach 17.99 mnt, comprising 14.21 mnt of ordinary steel and 3.78 mnt of specialty steel. Despite a 1.7% sequential rise, overall production levels remain historically low.
The current steel market reflects a divergence between domestic growth and export struggles. Ordinary steel volumes reached 9.36 mnt for domestic use reflecting an 8.2% increase over last year, while export volumes fell by 9.1% to 4.85 mnt, highlighting a persistent slump in international demand.
Steel production for January–March quarter is projected to decline, with H-beam output expected at 770,000 tonne (t) and small bars at 1.56 mnt. These figures represent a decrease from the previous quarter, falling by approximately 30,000 t and 50,000 t, respectively.
Outlook
Steel production is projected to remain subdued as the Ministry points to weak demand across the construction and manufacturing sectors. This downward trend, compounded by declining exports and ongoing global uncertainties, has prompted producers to adopt a cautious strategy, limiting any significant prospects for a near-term recovery.
Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and BigMint.
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