Japan produced 8.77 million tonnes of crude steel in January, up 2.1% from December but still down -2.8% year-on-year, according to the Japan Iron and Steel Federation (Jisf). Stagnant domestic steel demand and sliding export volumes have forced mills to cancel plans to increase production this year, Kallanish notes.

Over April-January, Japan produced 87.18mt of crude steel, -5.4% less than a year earlier. Hot rolled steel production was also down -5.4% to 76.8mt.

Japanese domestic demand is expected to see only a modest increase after a weak 2015. Some of this increase is expected to come from consumer consumption being brought forward ahead of a tax hike due in April 2017.

Any small increase in domestic demand is expected to be balanced by a fall in export volumes however as Japan struggles to compete in Asian spot markets. Preliminary figures for January show exports down -7.3% y-o-y and -11.7% from December at 3.16mt.