Japan’s crude steel output in the October-December quarter of 2019 is forecasted to fall 0.1% from a year earlier as trade tensions and uncertainty over China’s economy curb exports, the Ministry of Economy, Trade and Industry (METI) said. Crude steel output is estimated at 25.69 million tonnes versus 25.70 million tonnes a year earlier, the ministry said. However, Q-o-Q basis, country’s crude steel will surge by 0.8% against the last quarter of Jul-Sep’19.
In terms of demand for steel products, the same is forecasted to fall 2.9% y-o-y basis to 22.92 MnT whereas exports, which typically account for about 40% of Japanese steel production, are predicted to drop 1.4%.
Escalating trade tensions and uncertainty over the outlook for the Chinese economy is expected to keep weighing on exports and production,” Noriyuki Kuroda, director of metal industries division at METI said. Kuroda also warned output might fall short of the latest forecast as it does not reflect the recent shutdown of some steelmaking plants. However, higher public spending on infrastructure to guard against big disasters might mitigate some negative impact, he said.
In September, Japan had rolled out a twice-delayed increase in the sales tax to 10% from 8% as an effort for fixing the country’s tattered finances. However, this move could tip the economy into recession by dampening consumer sentiment. With reference to this, Kuroda commented that weaker demand after consumers’ last-minute purchases before the sales tax hike may also hurt manufacturers. Another reason that is hurting the Japanese steel sector is rising exports from Asia and Russia.
Japanese steel major, Nippon Steel has recently announced closure of its two steel plants at Kimitsu Steel Works until Dec’20 due to repair work being carried out. Two more steelmaking plants in the Nippon Steel group have also suspended operations due to fire, though one of them is scheduled to restart by 10 Oct.
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