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Steel Demand Prospects for the First Quarter of FY 2015 (April-June 2015)

Total steel demand for the first quarter of FY 2015 (April-June 2015) is estimated to be 23.21 million tons, a 4.7% decrease from the previous quarter and a 3.8% decrease on a year-on-year basis. The sector-by-sector breakdown is as follows.

Domestic demand
Construction: Steel demand in the construction sector will decrease from the previous quarter due to seasonal factors. On a year-on-year basis, the demand in civil engineering will decrease compared to the high level of demand in the same period of the previous year due to the effect of the accelerated implementation of the budget for the sector. The demand in the architecture sector will also decrease on a year-on-year basis due to the low amount of non-residential construction starts, while the number of privately-owned housing starts will exceed the level of the same period of the previous year.

Manufacturing: Steel demand in the manufacturing sector, including that for motor vehicles and electrical machinery, will decrease from the previous quarter due to seasonal factors. On a year-on-year basis, the demand will also decrease due to the decrease in demand for motor vehicles. Demand in industrial machinery will remain at a high level due to an increase in business investment including machine tools along with an improvement in corporate earnings, while demand in construction machinery will decrease due to a reactionary decline following the last-minute demand before the tightening of vehicle exhaust gas regulations. On a year-on-year basis, a decrease will also be seen in the industrial machinery sector as a whole.

Steel exports
Steel exports will decrease from the previous quarter due to the decrease in energy-related demand. On a year-on-year basis, exports of ordinary steels will remain flat due to the effects of the excess supply of steel persisting in Asia. Exports of special steels, which were at a high level in terms of energy-related exports for the same period of the previous year, will show a decrease.

Crude steel demand for this quarter is estimated to be 25.51 million tons, decreasing by 4.9% from the previous quarter and by 7.8% on a year-on-year basis. In the same period of the previous year, the level of the demand was high resulting in accumulation of inventories due to the backlog of orders bolstered by the last-minute demand preceding the consumption tax hike. As for this period, despite the current moderate recovery of the Japanese economy, the demand will be offset by the inventories which are still at a high level.

Steel Demand Prospects for the First Quarter of FY 2014 (April-June 2015)

(Unit: million tons)
Total Steel
Ordinary Steel Special Steel
Steel Demand 23.21 18.53 4.68
Year-on-year change (24.14) -3.8%
(18.93) -2.1%
(5.20) -10.0%
Change compared with the previous quarter’s forecast (24.35) -4.7% (19.43) -4.6% (4.93) -4.9%
1) Domestic Demand 15.34 12.18 3.16
Year-on-year change (15.98) -4.0% (12.62) -3.5% (3.36) -6.0%
Change compared with the previous quarter’s forecast (16.01) -4.2% (12.74) -4.4% (3.27) -3.6%
2) Export 7.88 6.35 1.53
Year-on-year change (8.16) -3.5% (6.31) +0.6% (1.85) -17.3%
Change compared with the previous quarter’s forecast (8.34) -5.5% (6.69) -5.0% (1.65) -7.6%

References:

Crude steel demand equivalent to shipment: 25.51 million tons
Year-on-year change: (27.67 million tons) -7.8%
Change from the previous quarter’s forecast: (26.84 million tons) -4.9%

Ordinary steel: Inventory of makers and wholesalers
Inventory of makers and wholesalers (end-March forecast): 6.96 million tons; inventory turnover: 1.12 months
Inventory for domestic market among the above inventory (end-March forecast): 5.93 million tons; inventory turnover: 1.48 months

Note 1: The figures in parentheses show the quantity for the same period of the previous year or the previous quarter’s forecast for comparison purposes (in millions of tons).

Note 2: The total steel amount does not always correspond to the combination of subtotals since those figures are calculated per thousand tons.

References for Demand Prospects (First Quarter of FY 2015 (April-June 2015))

1. Trends in Crude Steel Production (Unit: thousand tons)

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY 2015
1Q 31,060 19,093 28,067 26,368 27,498 28,081 27,672 25,510
2Q 30,448 24,236 27,357 26,950 27,260 27,737 27,890  
3Q 26,397 26,609 27,665 26,579 25,909 28,139 27,537  
4Q 17,596 26,510 27,705 26,566 26,638 27,567 26,836  
Total 105,500 96,448 110,793 106,462 107,305 111,523 109,935 25,510

Note 1: The data for the fourth quarter of FY 2014 is the forecasted result and the data for the first quarter of FY 2015 represents prospects.

2. Ordinary Steel: Sector-by-Sector Domestic Consumption (Unit: thousand tons)

Sector FY2014 1Q
actual consumption
FY2014 4Q
consumption forecast
FY2015 1Q
prospects
Year-on- year change Change compared with the previous quarter’s forecast
Construction 5,450 5,485 5,228 -4.10% -4.70%
Civil Engineering 1,617 1,814 1,538 -4.10% -15.20%
Architecture 3,833 3,671 3,690 -3.70% 0.50%
Manufacturing 7,170 7,255 6,952 -3.00% -4.20%
Shipbuilding 1,069 1,104 1,106 3.50% 0.20%
Motor Vehicles 2,837 2,857 2,656 -6.40% -7.00%
Industrial Machinery 1,303 1,303 1,262 -3.10% -3.10%
Electrical Machinery 745 784 753 1.10% -4.00%
Secondary Products 595 587 574 -3.50% -2.20%
Containers 310 303 302 -2.60% -0.30%
Other 311 317 299 -3.90% -5.70%
Total 12,620 12,740 12,180 -3.50% -4.40%

Note 2: The quantity is estimated mainly based on demand-related statistics.

Release date

April 2, 2015

Division in charge

Iron and Steel Division, Manufacturing Industries Bureau

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