Steel orders from Japan’s manufacturing sector up again in May

Steel demand from Japan’s manufacturing sector strengthened for a second month in May, while orders from the construction sector continued to fall.

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Steel orders during the month totalled 5.87 million tonnes, down 1.7% from April, according to the Japan Iron and Steel Federation.

However, those in the manufacturing sector rose by 1.2% to 1.61 million tonnes. This compares with 1.59 million tonnes in April.

In particular, automobile manufacturers – the sector’s biggest consumer – increased their orders by 5.3% month-on-month to 757,000 tonnes.

Still, many sectors of the economy remain weak. Orders from industrial machinery and equipment manufacturers fell by 11% from the previous month to 139,000 tonnes in May, while those from electrical equipment manufacturers totalled 118,000 tonnes, down 4.6% from April.

Demand from shipbuilders, which has been the hardest-hit segment of the manufacturing sector, slipped back after rising in April. Orders totalled 294,000 tonnes, down 1.7% on the month. Volumes were also down 19.5% compared with a year ago.

At the same time, total manufacturing orders were still down 8.7% on the year, indicating that while the economy is improving, it is from relatively low levels.

Meanwhile, orders from the construction sector posted a second straight month of falls in May, sliding 8.7% on the month to 931,000 tonnes, while those from dealers – an estimated 70% of which is destined for the construction industry – decreased by 8.7% to 1.08 million tonnes.

However, demand from the construction sector was up by 6.2% year-on-year.

Export orders, meanwhile, were essentially flat at 2.24 million tonnes.

Despite worrying signs of a slowdown in China and continued weakness in Europe, steel demand is expected to improve in the months ahead, as government spending kicks in and the manufacturing sector continues to improve, industry officials said.