Orders booked at Japanese mills in May, including exports, were down- 9.9% month-on-month and -7.8% year-on-year to 5.49 million tonnes in May 2015, according to the Japan Iron and Steel Federation (Jisf). The data shows a continued domestic downturn, even after there was sharp drop in the equivalent period of 2014, Kallanish notes.

Over April-May, the first two months of the Japanese financial year, Japanese mills booked 11.58mt of orders, down -4.4% y-o-y. Hot rolled strip was the only major product to see any increase over the period, 2.2% to 3.69mt. That boost seemed largely driven by export orders, which were up 5.2% y-o-y to 4.53mt.

Domestic orders however were down -9.3% to just 6.93mt. This is despite the fact that a year ago Japan was already seeing a sharp decline in demand after a hike in consumption tax from 1 April 2014.

Japan’s shipbuilding sector outperformed the rest, growing 1.3% y-o-y to 687,000t of direct demand from mills over April-May. Every other sector, from construction to automotive, was down y-o-y.

Japanese steelmakers have been reducing production and diverting material to exports, which are more profitable thanks to the weak Yen. They expect domestic demand to recover later in the year. May’s weak data leaves the recovery with a steeper hill to climb however.