METI: Japan's July-Sept crude steel output to rise

The ministry notes that although the predicted total is virtually flat on-year, if realised the total would mark the first on-year quarterly rise since the October-December quarter of 2023.

"Demand for steel products is sluggish both domestically and internationally, and production activities of steel manufacturers are expected to remain at a low level throughout this fiscal year," the ministry said when tabling its forecast late on Tuesday.

The demand environment remains virtually unchanged, it said, pointing out that in the construction sector, labor shortages and construction delays due to rising construction costs continue. The ministry could add to those woes the impact of Japan's scorching summer this year, with heatstroke warnings already issued in 44 prefectures and outdoor workers encouraged to take frequent breaks. Daytime temperatures in many parts of Japan topped 40 degrees Celius earlier this week, breaking historic records.

Regarding production of the two steel items METI only tracks in its quarterly forecasts – construction steel items H-beams and small bars – the ministry expects that H-beam output this quarter will reach 650,000 tonnes, lower by 70,000 tonnes from April-June, and small bar output (consisting mostly of rebars) will dip by 80,000 tonnes on quarter to 1.58 million tonnes. Again, sluggish growth in construction-related demand is blamed for the fall.

Meanwhile, automobile production is slowing from weak demand and concerns among the domestic automakers that US President Trump's huge tariffs on vehicle imports will hit their vehicle exports. "With production plans based on this demand environment, steel manufacturers have not lost their cautious stance," METI observed.

There is one tiny piece of better news, however, with newly released Japan Iron & Steel Federation data showing that inventories of ordinary steel products at the end of June stood at 6.25 million tonnes, lower by 131,000 tonnes or 2.1% from end-May and representing the first on-month decline in four months.

By category, stocks held by producers dropped by 2.7% to 4.85 million tonnes, while dealer inventories increased slightly by 0.2% to 1.4 million tonnes. But the mills can't take too much comfort from the decline, with most of the fall attributed to steelmakers and traders holding back on exports awaiting Trump's latest tariff announcement. Inventories of steel awaiting export shipment totalled 1.14 million tonnes at end-June, lower by a large 8.4% from end-May.

A factor in the drop too would be the 1.7% on-month reduction in crude steel production during June to 6.718 million tonnes, Mysteel Global notes.

Japan crude steel production

*Forecast; Unit: Million tonnes

Source: METI

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com