Japan's steel industry faces new crisis amid global trade tensions

Japan's steel industry is facing renewed pressure due to a global oversupply of steel, primarily driven by China. This oversupply has triggered a wave of trade measures worldwide. Japan itself has been subject to such measures on hot coils from various regions, including Europe, South Africa, and Turkiye, over the past year.

Now, this pressure is intensifying with proposed measures from both India and South Korea, a key partner in steel import and export for Japan.

South Korea's anti-dumping lawsuit

On 19 December 2024, Hyundai Steel filed an anti-dumping (AD) lawsuit against Japanese hot coils. The decision on whether to launch a formal investigation will be made within 60 days of the filing, based on input from other Korean steel companies, including industry giant POSCO. Consequently, industry observers are closely watching whether POSCO and other Korean steelmakers will follow Hyundai Steel's lead.

Growing steel imports from South Korea

Steel imports into Japan, particularly from South Korea, are on an upward trajectory. According to Ministry of Finance trade statistics, thin sheet imports reached 191,000 tonnes (t) per month between January and November 2024, a substantial increase of 35,000 t compared to FY'21. Hot coils and hot-dip galvanized steel sheets are driving the growth.

Japanese steelmakers' response to rising imports

Japanese steelmakers are closely monitoring trends and considering countermeasures in response to the surge in steel imports from South Korea and China. The Japan Iron and Steel Federation (JISF) is exploring specific trade measures with member companies. Tadashi Imai, president and COO of the JISF, emphasized the need for effective measures to mitigate the impact of steel imports on Japan's supply chain and decarbonization investments in the steel industry.

Japan-South Korea steel trade at a crossroads

As Japan and South Korea mark the 60th anniversary of normalized diplomatic relations in 2025, the steel trade between the two nations is facing an uncertain future. With Japan increasingly likely to implement trade measures, all eyes are on South Korea's response. The outcome of a potential anti-dumping investigation is difficult to predict, and its impact on South Korea's annual hot coil exports to Japan currently nearly 2 million tonnes (mnt) remains unclear. This development raises concerns that the two nations may no longer enjoy their historically mutually beneficial free trade relationship, leaving the steel trade at a crossroads.

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