Japan's construction steel demand to remain strong in FY'23 on rising investments

Japan's construction steel demand is expected to stay strong in FY'23 (Apr'23-Mar'24), as per forecast of the Institute of Construction Economics. Construction investment in FY'23 is expected to increase by 3.4% y-o-y to JPY 69.9 trillion as both government construction investment and private construction investment are expected to be higher than last year's levels.

Government construction investment will increase by 1.9% y-o-y to JPY 23.99 trillion, while private construction investment will increase by 1.8% y-o-y to JPY 16.8 trillion, and non-residential construction investment will increase by 3.4% to JPY 19.94 trillion.

Although private housing investment increased there were concerns such as rising construction costs and rising mortgage interest rates. On the other hand, non-residential sales are expected to recover this year. Demand from warehouses and distribution facilities has continued to remain strong as construction activities have started and orders are increasing. Also, demand from other industries namely logistics, manufacturing, retail and multi-tenant facilities are anticipated to remain stable.

Construction steel demand is likely to remain supported on the back of expansion of inbound demand from factories, offices and stores as there are plans to build luxury hotels amid the stabilisation of corona counter measures globally. Profit margins will largely depend on setting of selling prices and cost push from rising electricity prices.

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