Japanese steelmakers see more improvement in domestic orders

Japan’s domestic steel demand appears to be on the road to recovery, with order volumes rising in January for a second consecutive month.

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Domestic orders rose by 4.5% to 3.69 million tonnes, according to the Japan Iron & Steel Federation (JISF), although total orders fell by 1.5% to 6.09 million tonnes on a 9.4% month-on-month fall in export orders to 2.32 million tonnes.

“Although the improvement so far has been very gradual, the mood is good, especially with the weaker yen,” an official at Japan’s largest steel producer, Nippon Steel & Sumitomo Metal (NSSMC), told Steel First.

“Although we had expected to see a stronger recovery by now, we think that future demand will continue to improve slowly,” the official added.

Automobile manufacturers, the sector’s biggest consumer, increased their order volumes by 6% to 724,000 tonnes, while orders from industrial machinery and equipment manufacturers were up from December by 5.6% to 121,000 tonnes.

However, demand from shipbuilders remains very subdued, with orders falling by 8.8% to 276 million tonnes. Over the preceding year, volumes were down by almost 15%.

Orders from electrical equipment manufacturers also fell, going down by 4.8% from December to 118,000 tonnes.

Total manufacturing orders rose by 1% to 1.52 million tonnes.

Orders from the construction sector continued to show strength, meanwhile, rising by 10% to 1.01 million tonnes, while those from dealers increased by 4.8% to 1.15 million tonnes, of which an estimated 70% is destined for the construction industry.

The figures mark seven straight months of growth. Indeed, in the first ten months of the fiscal year, orders from the construction sector were up by 10%, compared with a 7.5% decline in orders from the manufacturing sector over the same period.

Demand remains steady for reconstruction work, including civil engineering projects in Tokyo, although housing starts remain weak.

“We think that construction demand will continue to grow faster than for the manufacturing sector,” the NSSMC official noted, “as many automakers and other manufacturers have shifted production overseas, which means there is little room for improvement in [their] orders.”

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