According to a forecast released by Japan’s MLIT (Ministry of Land, Infrastructure, Transport and Tourism), the demand for ordinary carbon steel from country’s construction sector is anticipated to fall by 7.8% y-o-y basis in September 2018.
While the sections demand is expected to rise 1.6% y-o-y basis and 2.5% against the month of Aug’18 to 410,000 tonnes, the demand for small bars is expected to fall 5.7% y-o-y basis but rise by 3.6% against the previous month of August to 570,000 tonnes.
As per the market sources, the demand for steel from the construction sector in 2017 was very high however this year on year decline does not mean that Japan’s construction steel demand is decreasing.
Japanese mills plan to produce a total of 1.12 MnT of H-beam during July-September, up 16.8% year on year, and by 8.5% from the previous quarter of April-June’18, according to the survey conducted by Japan’s Ministry of Economy, Trade and Industry. The mills also plan to produce 2.14 MnT of the small bar, up 2.5% from a year ago, but down 2.9% from the previous quarter.
Japan’s construction steel demand will increase in the long run
According to OECD (Organisation for Economic Cooperation & Development), Japan’s construction sector is expected to grow at a CAGR (Compounded Annual Growth Rate) of 1.2% till 2019. Factors supporting this growth include investments in residential and infrastructure markets, low unemployment rates, improvements in consumer and investor confidence, positive developments in regional economic conditions and investment in public transport infrastructure.
Additionally, the country’s urban population is projected to increase to 94.1% by 2020, rising from 115.3 million in 2010 to 119.4 million in 2020 according to the United Nation’s Department of Economic and Social Affairs (UNDESA). The country’s growing urbanisation will create fresh demand for the residential construction market till 2020. Also, Japan’s steel demand will be supported by infrastructure projects associated with the upcoming Tokyo Olympic Games in 2020. The Japan Iron & Steel Foundation (JISF) has forecasted that as much as 3 MnT of steel demand will arise because of the 2020 Olympic Games.
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