Japan's Nov manufacturing PMI at 54.5, highest since Jan'18

For November, Japan's Purchasing Managers' Index (PMI) for its manufacturing industry scored 54.5, the highest since January 2018, or up on month for the 10th consecutive month by another 1.3 basis points, according to release by the index compiler - au Jibun Bank Corporation - on December 1.

The rather high PMI last month was largely supported by higher output for the second consecutive month, though the growth rate eased slightly by the challenge in sourcing and receiving raw materials, according to the report.

"Japanese manufacturers remained confident that output would rise over the coming 12 months. Firms were hopeful that an end to the COVID-19 pandemic would accelerate the launch and mass production of new products, amid a broad-based boost to demand in both domestic and international markets," an analyst quoted in the release said.

A Tokyo-based steel trader was hopeful for further improvement in the country's manufacturing sector and in turn better steel demand too. "Japan's auto sector, the largest manufacture sector for the country, has seen the production recover since November, and domestic steel producers may get busier in the coming months to meet the rising demand from auto-related customers," he said.

As a result, "steel supply may become tighter again in January-March after the ease in September-November, as Japan's integrated mills have lower ironmaking capacities with their restructuring and blast furnace shutdowns, so they need to resort to other means to raise steel output," he added.

Nippon Steel, Japan's largest integrated mill, for example, shut down all its ironmaking facilities at Kure area of Setouchi Works in western Japan on September 29, and its blast furnace at Wakayama area of Kansai Works also in western Japan, permanently offline by the end of September, as reported.

A second Tokyo-based steel trader expressed his concern on the adverse impact of the Omicron on Japan's recovery in the manufacturing sector. "The new Omicron cases are few, but if the number grows, the Japanese government may impose the fifth round of the state of emergency, so we need to closely monitor the development," he said.

As of December 1, 121 new COVID-19 cases were confirmed in Japan with 21 in Tokyo, among which two were Omicron variant cases, according to official release.

Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.