Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Japanese steelmakers Nippon Steel and JFE Steel plan to cut production and initiate banking operations at eight blast furnaces amid 24.3pc slump in steel demand forecast in Q2. Davis Index learnt Nippon Steel has initiated banking operations at six furnaces, while JFE Steel is idling two furnaces, reducing Japan’s crude steel production by 25pc to 30pc.


Steel demand in Q2 (July to September) is expected to decline to 17.28mn mt from 22.81mn mt in the prior quarter, according to Japan’s Ministry of Economy and Trade and Industry (METI). Crude steel demand for Q2 is estimated to fall by 27.9pc to 17.70mn tons. The ministry slashed steel demand citing the impact of COVID-19 pandemic on economic activities. 


In Q2, domestic steel demand is forecast to decline by 22.1pc to 11.97mn mt from the prior year amid sluggish demand from architecture sector, but government initiatives for public construction and renovation of infrastructure is expected to increase demand from civil engineering sector. Impact of the pandemic and other factors will decrease steel demand from manufacturing sector, however, demand from auto sector is expected to improve gradually as Japanese automakers increase production.


Japan’s steel exports in Q2 are expected to decrease by 28.6pc to 5.30mn mt from the prior year as global steel demand remains subdued.


Steel production and sales in May

Japan’s crude steel production in May was 5.92mn mt, down by 31.7pc from May 2019. Of the total crude output, 1.6mn mt was produced through electric arc mode. Crude inventory in May fell by 23.9pc to 80,279mt from a year ago.

Japan’s steel production in May
ProductionMay% Change MoM% Change YoY
Crude Steel59,27,368-9.9-31.7
Pig iron44,03,858-10.2-32.7


Sales of semi-finished steel products dropped by 23.6pc in May from the prior May. Among hot-rolled finished steel products, sales of rails, wheels and accessories fell by 56.5pc, steel wire rods down by 31.8pc and steel stripes were down by 29.3pc and other products were down by 7pc to 22.7pc from a year ago. Sales of special steel hot-rolled products fell by 45.4pc. Sales of ordinary cold-rolled steel products dropped between 17.1pc to 36.2pc, while special steel cold-rolled products sales dropped by 19.1 to 43.5pc. 


Inventory at steelmakers and wholesalers at June end was forecast at 6.26mn mt and inventory turnover was 1.41 months, according to METI’s report.



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