METI forecasts Japan's steel production to remain flat in Jul-Sept'24

Japan Metal Daily: The Ministry of Economy, Trade and Industry (METI) released its forecast for crude steel production (equivalent to shipments) for July-September on 12 July. The projection is for 21.51 million tonnes (mnt), which is unchanged from the previous quarter (April-June). This marks the fifth consecutive quarter with production hovering around the low level of 21 mnt. As a result, the annualised rate remains subdued at around 85 mnt.

In July to September, crude steel production is expected to inch down by 0.2% y-o-y compared to the previous year. While auto demand is expected to rebound from production cutbacks, construction and industrial machinery sales are slow, limiting overall steel product demand. The export market is also facing challenges.

Manabu Nabeshima, director of the Metals Division at METI, highlighted the importance of monitoring the impact of China's supply-demand balance on the global market.

The forecast predicts a demand for steel products of 19.15 mnt in the July-September period. This represents a 1.5% y-o-y increase from the previous fiscal year but a 5.5% y-o-y decrease compared to the same period last year.

Ordinary steel makes up a significant portion of this demand, with 15.37 mnt. This includes 9.97 mnt for domestic consumption in Japan and 5.4 mnt for exports. While this shows a 0.7% q-o-q rise from the previous quarter, it's still down by 5.1% y-o-y.

While a rebound in domestic auto demand is anticipated, while other sectors show signs of slowing down. Industrial machinery, particularly construction machinery which is sensitive to global trends, experiences sluggish growth. Steel consumption in this sector is expected to decline by 3.6% y-o-y to 1.175 mnt. Weak demand is also anticipated in construction, shipbuilding, and electrical machinery sectors.

The export market is not showing signs of improvement either. METI emphasises the need to closely monitor the situation in China to understand its impact on the steel market.

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