Recent Market Development in the Japanese Steel Industry The Japan Iron and Steel Federation (JISF) 86th Session of the OECD Steel Committee, Paris 25-26 March 2019
Japan’s whole economy has improved slightly supported by recovering domestic demand Contributions to percent change in real GDP % 12.0 8.0 Evolution of real GDP 2.2 4.0 1.4 0.0 (4.0) Change in public inventories -2.6 Net exports of goods and services Public demand (8.0) Private non-resi. investment Private residential investment (12.0) Private consumption GDP (sa, annualised) (16.0) 14.1Q 3Q 15.1Q 3Q 16.1Q 3Q 17.1Q 3Q 18.1Q 3Q Source: Cabinet Office 1
Supply-side issues (e.g. natural disasters) have made Japanese steel firms difficult to meet foreign demand 2015=100 Domestic demand (sa) Exports (sa) 2015=100 140 140 Evolution of ordinary steel orders 130 130 120 120 110 110 100 100 90 90 80 80 70 70 Domestic demand Exports 60 60 14.1 7 15.1 7 16.1 7 17.1 7 18.1 7 14.1 7 15.1 7 16.1 7 17.1 7 18.1 7 Natural disaster type Location Month Earthquake Osaka June 2018 Torrential rain Western Japan July 2018 Earthquake Hokkaido September 2018 Typhoon No. 21 Western Japan September 2018 Source: JISF 2
The lower output was not due to a slowdown in domestic demand, but rather from supply-side constrains (e.g. natural disasters) Crude steel production Million tonnes Evolution of crude steel production 28.5 CY 2016 CY 2017 CY 2018 28.0 Million tonnes 104.8 104.7 104.3 27.5 27.0 26.5 26.0 25.5 25.0 Crude steel production 24.5 14.1Q 3Q 15.1Q 3Q 16.1Q 3Q 17.1Q 3Q 18.1Q 3Q Source: JISF calculation based on data from METI 3
Japan’s steel demand is expected to remain stable in FY 2019, with a slight change in manufacturing sectors Sectors FY 2017 FY 2018 FY 2019 FY 2019 Million tons Y-o-Y % Ordinary steel 49.75 49.51 49.34 -0.4 Construction 21.67 21.28 21.34 0.3 6.85 6.70 6.96 4.0 (Civil engineering) Outlook (Building) 14.82 14.59 14.38 -1.5 +0.2 Manufacturing 28.08 28.23 28.00 -0.8 (Shipbuilding) 4.08 4.03 0.0 4.03 0.0 (Automotive) 11.31 11.33 11.13 -1.8 5.05 5.22 5.28 1.1 (Industrial machinery) +0.6 3.10 3.10 3.07 -0.9 (Electrical machinery) Special steel 13.14 13.41 13.29 -0.9 Source: JISF 4
Global steel market conditions have improved since 2016 USD/tonne World capacity utilisation rate and HRC price % 1000 85 Development of the global steel HRC price (LHS) Establishment of CUR (RHS) GFSEC (2016) 800 80 market (1) 600 75 400 70 200 65 0 60 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: JISF calculation based on data from OECD 5
... and there was a temporary breathing space in trade friction in 2017 Number of steel AD/SG investigations (world) 45 Development of the global steel AD 39 39 40 SG 35 30 market (2) 24 25 18 20 15 10 7 5 5 5 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: JISF 6
The global steel industry needs to make efforts to promote the viability of the steel industry Efforts to promote the viability of the Avoid unfair trade steel industry Prevent: the ・ the revival of excess capacity ・ the creation of new excess capacity Meet quantitative / qualitative demand from customers 7
Thank you for your attention 8
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