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Total orders came in at 6.04 million tonnes, up by 6.4% from the previous month, with domestic orders rising by 4.9% to 3.63 million tonnes and exports going up by 8.3% to 2.32 million tonnes.
But despite the rise, demand from many key segments of the manufacturing sector remains relatively weak, JISF said.
Manufacturing sector steel orders in July rose by just 2.7% from the previous month to 1.67 million tonnes, as demand from the automotive sector fell back.
Steelmakers are becoming increasingly nervous about how demand will develop after the ending of government subsidies on the purchase of environmentally friendly cars, which will happen in the next few weeks.
“It is a major worry for us, although it is still hard to see just how badly demand will be affected,” a senior industry source admitted.
Meanwhile, orders from industrial machinery and equipment manufacturers rose by 1.5% to 129,000 tonnes in July. However, year-on-year, orders were down by 6.3%.
Separate data from the Japan Society of Industrial Machinery Manufacturers showed that orders for industrial machinery fell by 13.3% year-on-year, indicating that manufacturers continue to avoid new investments.
Similarly, orders from electrical equipment manufacturers were down by 4.5% from a year earlier, and down by 3.4% from June levels, to 119,000 tonnes.
Demand from shipbuilders in July was up by 5.4% from June to 351,000 tonnes, but the year-on-year comparison showed an 11.1% drop.
“Shipbuilding demand has little hope of improving any time soon,” the official noted.
Meanwhile, orders from the construction sector rose by 6.9% to 889,000 tonnes, while those from dealers – an estimated 70% of which is destined for the construction industry – rose by a similar amount to 1.07 million tonnes.
Demand remains robust for reconstruction work, including new buildings and civil engineering projects in Tokyo.
Japan’s largest steel producer, Nippon Steel, has projected domestic consumption to increase to 15.67 million tonnes over July-September, from 15.53 million tonnes in the previous quarter, largely on a continued rebound in demand from the construction sector, which will more than offset a decline in orders from the manufacturing sector.
Export orders also bounced back, rising by a healthy 9.1% from June to 2.32 million tonnes.
Nevertheless, the sector is perhaps the one of greatest concern to Japan’s steelmakers, given the crisis gripping Europe and its increasingly evident knock-on effects on global demand, particularly in China.