Japan's crude steel production to decline by 1.7% in Q1CY'24: METI

The Ministry of Economy, Trade and Industry (METI) of Japan, on 26 December 2023, announced its production plan for crude steel for the period of January to March 2024.

The crude steel production is expected to decline by 1.7% y-o-y to 21.98 million tonnes (mnt) in Q1CY'24 against October to December (Q4CY'23).

While, there was a 1.7% y-o-y increase as compared to the same period previous year, marking the third straight quarter of growth. However, the level remains low, at around 22 mnt.

"Depending on developments in Europe and China, there is a possibility that steel consumption will decline to some extent," says METI officials. Daisuke Matsuno, who leads the Metals Division, emphasised the importance of closely monitoring demand patterns.

Demand for steel products

Steel demand in the Q1CY'24 is projected to reach 19.92 mnt, reflecting a slight decrease by 0.9% y-o-y compared to both the prior fiscal year and down by 0.5% y-o-y for the same period a year ago. While both declines are anticipated, the rate of decrease is expected to be minimal and remain stable compared to the previous quarter.

Domestic and export demand

The steel demand in Japan is estimated to be around 15.91 mnt, with 10.31 mnt for domestic use and 5.6 mnt for export. This shows a slight decrease compared to the previous year, but the difference is minimal, approximately 1-4%.

The supply and demand in the Chinese steel market will continue to ease. This will not only affect the export market but also have an impact on sectors like industrial machinery, which are often exported to China. METI emphasizes the need to closely monitor these developments.

Factors affecting demand

While there are concerns about a slowdown in some areas of industrial machinery due to external demand, the domestic demand for steel is expected to remain at a similar level to the previous fiscal year. The recovery of automobile sales is helping to offset the slowdown in other sectors. However, the impact of China's steel market on the Asian market continues to be a cause for concern, as China's economy is slow to recover.

Conclusion

Japan's domestic crude steel production is expected to be 88 mnt in FY'23, which is slightly increased compared to 87.84 mnt in FY'22. "There is a possibility of a downside due to strong uncertainty, especially in overseas markets", says METI.

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.