Japanese steel output down for a second month

Japan's crude steel output fell by 6.7% year-on-year in October, although volumes edged up 0.4% from the previous month to 8.84 million tonnes.

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The figure marks the second straight month of declines after six straight months of year-on-year increases, according to the Japan Iron & Steel Federation (JISF), with pessimism about demand going forward making mills increasingly curb output.

“We are worried about demand. It is not looking strong and we will need to keep production carefully in line with that falling demand,” an official at one of the country’s largest producers admitted.

Output by blast furnace operators edged up 0.2% from September but was down 5.7% on the year to 6.797 million tonnes on weakening demand from the automotive sector and poor outlook for exports.

Electric arc furnace operators saw their output increase on the month by 1.3% to 2.05 million tonnes. However, output was down 10% on the year.

Unsurprisingly, many products produced by mini-mills including bars, wire rod and sections saw significant rises.

By contrast, output of flats was widely lower for a second straight month.

Hot rolled sheet output fell by 1.8% to 3.62 million tonnes; that of cold rolled sheet, by 3.5% to 1.71 million tonnes; that of heavy plate, by 6% to 847,500 tonnes. Output of galvanised sheet was down 4.4% at 1.061million tonnes.

In all, hot rolled production fell by 0.2% on the month and dropped by 4.5% on the year to 7.78 million tonnes.

There are growing fears that Japanese demand may not grow as much as forecast because of the deepening debt crisis in Europe and a slowdown in China’s economy.

Moreover, Japan’s domestic auto sales declined in October for a second straight month as the appetite for fuel-efficient vehicles weakened following the expiry of government subsidies in the previous month.

Sales declined by 6.7% from a year earlier to 299,334 vehicles in October, according to the Japan Automobile Dealers Assn.

“Overall demand is poor, but flats demand is especially weak, both at home and for export,” the official noted.

“We do not see any big improvement in demand for the next few months,” he added.

Carbon steel production decreased by 0.1% from September and was down by 4.1% from a year earlier to 6.89 million tonnes.

Output of speciality steel products rose 2.5% on the month but plunged 15.1% year-on-year to 1.94 million tonnes.