Japanese demand for carbon and special steel in crude steel equivalent for both domestic sales and export will rise 1.2% on quarter to 24.69 million tonnes during the present July-September period, according to the latest forecast released by Japan’s Ministry of Economy, Trade and Industry (METI) on July 13. This would make for the fifth consecutive quarter-on-quarter rise but more significant is the fact on a finished steel basis, METI puts growth far higher at 7.2%, Mysteel Global notes.
The demand growth in terms of “crude steel equivalent”, according to the ministry’s forecast, is 30.1% higher on year, though this is mainly because of the low base in July-September 2020 when the country’s economic activities were restricted by the COVID-19 onslaught. But comparing with the pre-COVID performance in July-September 2019, the forecast crude steel equivalent demand for this quarter is slightly higher than the 24.55 million tonnes-prediction two years ago.
METI explained in the release that domestic steel demand will remain in recovery. The Japanese government’s National Resilience projects will generate stable civil engineering demand while the country’s manufacturing sector will also need more steel for their higher output.
In fact, regarding finished carbon steel demand for domestic sales, METI forecasts that most sectors – with the exclusion of shipbuilding – will lift their consumption. Shipbuilders are expected to consume about 649,000 tonnes of finished carbon steel in July-September, down 12.2% on year and 0.8% lower on quarter, according to the release. On the other hand, auto sector steel demand will grow by 7.9% on year (and by 11.9% from April-June) to 2.57 million tonnes.
Steel industry insiders are comfortable with METI differentiating between crude steel and finished steel in its quarterly demand forecasts, pointing out that finished steel can be supplied from inventories whereas the ministry’s use of crude steel equivalent gives a more accurate picture of actual steel production trends.
Meanwhile, METI expects growth in demand for finished steel for export will be larger than the increase predicted for domestic sales because overseas economies will continue recovering, the release said.
The Japanese integrated mills are more aggressive to export, a Tokyo-based trader explained, because overseas prices have risen much faster than those in Japan. “The blast furnace mills have to prioritize supply for domestic long-term contract customers, but they are trying to expand their exports to improve their own financial situation,” he said.
According to the latest available data from the Japan Iron & Steel Federation, Japan’s carbon steel exports in May reached a 13-month high at 1.79 million tonnes, up 9.5% on year and 4.1% higher on month.
Japan’s finished steel demand forecast (Jul-Sept)
| Finished products total | Carbon steel | Special steel | |
| Total (million tonnes) | 21.75 | 16.9 | 4.85 |
| Y-o-Y | +17.% | +9.1% | +56.6% |
| Q-o-Q | +7.2% | +7.7% | +5.6% |
| For domestic (million tonnes) | 14.39 | 10.9 | 3.49 |
| Y-o-Y | +12.6% | +4.2% | +50.2% |
| Q-o-Q | +5.3% | +5.5% | +4.4% |
| For export (million tonnes) | 7.35 | 6 | 1.35 |
| Y-o-Y | +26.7% | +19.2% | +76.1% |
| Q-o-Q | +11.3% | +11.9% | +8.7% |
Source: METI
Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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