Japan: Domestic demand for ordinary steel products declines y-o-y in Jan-Jul'24

Japan Metal Daily: Domestic demand for ordinary steel products in Japan exhibited a downward trend in the first seven months (January-July) of 2024, primarily due to the slump in manufacturing industries such as automobiles and industrial machinery. The cumulative order volume for domestic markets decreased by 1.9% y-o-y to 19.77 million tonnes (mnt), falling below 20 mnt for the first time since 2020. This decline is comparable to the levels seen during the COVID-19 pandemic.

July orders decline

Orders for the domestic market in July fell slightly by 0.6% y-o-y to 2.852 mnt. While this decline was small, it marks the second consecutive month of negative growth. The overall trend of domestic steel orders has been sluggish since the beginning of the year, with only a few months showing growth.

Breakdown by industry

The decline in domestic steel demand is largely attributed to the slump in the construction and manufacturing industries. Orders received by these two sectors from January to July were down by 3.5% y-o-y and 3.3% y-o-y, respectively, compared to the same period last year. The manufacturing industry, in particular, has been hit hard by the decline in automobile (-7.5% y-o-y) and industrial machinery (-11.5% y-o-y) production.

Outlook

If the current pace of recovery in demand continues, orders to the domestic market for the entire CY'24 (January-December) are expected to be around 34 mnt. This figure is lower than the 20-year low of 35.9 mnt recorded during the pandemic. The ongoing challenges in the manufacturing sector, especially in automobiles and industrial machinery, pose a significant threat to overall steel demand in Japan.

Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.