Japan's ordinary steel imports jump 11% in 2023

Despite sluggish domestic demand, demurrage problems at wharves and a significantly weakened currency, Japan's total steel imports rose further during Calendar 2023 to reach 7.57 million tonnes, the highest level since 2019, new data from the Japan Iron and Steel Federation (JISF) and the Ministry of Finance show.

The grand total includes imports of ferroalloys, pig iron, semi-finished steel and others, some of which plunged on year and reduced the total on-year increase to 1.6%, the data show, while for the subtotal of ordinary steel, the volume of 4.7 million tonnes was higher by 11.1% from 2022 and also marked the highest since 2019 when the total topped 4.87 million tonnes, the JISF statistics show.

Within the ordinary total last year, South Korea remained Japan's largest supplier, shipping 2.95 million tonnes, up by 11.8% on year, with Taiwan the next largest at 855,125 tonnes and China 793,702 tonnes, meaning that together, these three countries accounted for about 97% of Japan's ordinary steel import last year.

"The volume of imports increased due to the difference in domestic and foreign prices," a Japanese source said candidly, even though the Japanese yen had weakened substantially against the US dollar, falling from Yen 130=$1 in March last year to Yen 151=$1 in mid-November, Mysteel Global notes. Even though Japanese importers had to pay more in yen for dollar-denominated foreign steel, the gap between domestic and import prices still made the business worthwhile.

For example, prices for 16mm thick heavy plates in Tokyo last December were in the range of Yen 142,000-146,000/tonne while the average CIF price of imports that month (converted to yen) was Yen 108,200/t, Mysteel Global notes.

For the Japanese steelmakers, the issue of concern regarding imports remains galvanized sheets and coils, and in particular those from China. During last year, China's ordinary steel exports were 22% higher on year but within that total, those of galvanized flats had jumped by 33.4% from 2022 to reach 316,610 tonnes. In fact, GI accounted for about 40% of China's total ordinary steel exports to Japan last year, with hot-rolled and cold-rolled coils accounting for most of the remainder, the JISF figures show.

"General-purpose GI sheets and coils that do not have strict quality requirements or delivery times are inexpensive imported materials that have greatly expanded their share of the domestic steel sheet market," another Japanese source observed.

Though South Korea was a much larger supplier of GI to Japan than China last year-shipping 801,740 tonnes, up 27% on year-Korean GI was comparatively more expensive than China-origin, the Japanese finance ministry statistics show. The average CIF price of Korean GI arriving in Japan last December was $874/t, which compares with $839/t for China-origin, according to the statistics.

"From around 2014, the Japanese steelmakers concentrated on producing high-value-added high corrosion-resistant steel sheets and reduced their output of commodity grade GI which they considered to be less profitable," the second source recalled. The Japanese mills maybe regretting that decision now, Mysteel Global notes.

Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.