Japan’s Nippon Steel and Sumitomo Metal Corporation (NSSMC) has predicted a modest but widespread fall in Japanese steel demand in the first quarter of the new financial year starting in April. Only special steel consumption is expected to show a slight improvement from the previous quarter, Kallanish notes.

A seasonal decline in steel demand in the first half of the fiscal year should turn around in the second half. This will happen on the back of better automobile output and investment for the 2020 Olympics, NSSMC believes.

NSSMC expects total steel consumption to be down -3.09% from the previous quarter and -1.7% year-on-year in the current three-month period to 15.05 million tonnes. It also expects crude steel production to be down -2.06% quarter-on-quarter and -2.36% y-o-y to 25.24mt.

Although consumption of special steel is expected to fall -0.32% from a year earlier, this is actually a 0.32% increase q-o-q to 3.11mt. That improvement is minimal compared to a -4.02% q-o-q and -2.13% y-o-y drop in consumption of ordinary steel to 11.93mt.

Industrial machinery is set to be the worst performer y-o-y, with ordinary steel demand falling -8.87% to 1.13mt, while shipbuilding demand is down -5.41% y-o-y to 1.05mt. Q-o-q however, a -6.79% drop in automotive steel demand to 2.61mt is the driver for a -5.56% fall in total demand from manufacturing to 6.63mt.