Japan’s FY23/24 crude steel output falls 1.1% on slow construction demand

Crude steel output in Japan, the world’s No.3 producer, declined by 1.1% in fiscal 2023/24, weighed down by sluggish demand in the construction segment and weak exports amid rising exports from the world’s top steel producer China.

Output, which is not seasonally adjusted, slid to 86.83 million metric tons in the year ended March 31, marking the second consecutive annual drop, the Japan Iron and Steel Federation said on Monday.

The figure represents the lowest level since fiscal 2020/21 year when a demand collapse caused by the COVID-19 pandemic pushed production to its lowest point in about 50 years, according to an analyst at the federation.

“In the construction sector, demand remained sluggish due to soaring material prices and delays in construction schedules caused by labour shortages,” he said.

“Exports were also lacklustre despite the yen’s depreciation, reflecting the surge in steel exports by China,” he added.

In March, Chinese steel exports climbed to 9.89 million tons, the highest for a month since July 2016, bringing the first-quarter total to 25.8 million even as overall exports in the world’s second-largest economy contracted sharply.

Japan’s steel production for March dropped 3.9 % from a year earlier to 7.2 million tons, the federation said, though output increased 2.9 % from February.

A slump in Japan’s auto production after a safety test scandal at Toyota Motor’s 7203.T small car unit also slowed steel demand in the January-March quarter, the federation’s analyst said.

Earlier this month, the Ministry of Economy, Trade and Industry forecast that Japan’s crude steel output in the April-June quarter will likely decline by 2.2% from a year earlier, noting slack demand in construction and non-automobile manufacturing sectors.
Source: Reuters (Reporting by Yuka Obayashi; editing by David Evans)