Japan Says Q2 Steel Output Drop To 6-Year Low

Japan's steel production from April to June is forecast to fall 7.8 percent from a year earlier, the lowest quarterly output in six years, the Ministry of Economy, Trade and Industry (METI) said. The slump in steel output is the latest in a series of signs that economic growth is slowing, despite Prime Minister Shinzo Abe's moves to stimulate the economy and calls for more cash.

The ministry predicts a decline in steel production of 25.51 million tonnes in April-June, to its lowest quarterly level since 2009, when steel demand was hit hard by the global financial crisis. "Metallurgists are forced to cut output to meet slow demand for automobiles and civil engineering and to reduce inventories," Yamashita, director of METI's iron and steel division, told a news conference.

Stocks of steel products in Japan for the domestic market are estimated at 5.93 million tons at the end of March. “That's a pretty high level,” Yamashita said. The fall in energy demand has caused a decline in the use of steel products such as pipes, as a result of falling oil prices, Yamashita said.

Demand for steel products will decline 3.8 percent to 23.21 million tons in April-June from a year earlier, the ministry said, citing industry research. The decrease in exports of steel products by 3.5 percent is also forecasted. Exports of special steel products, including drill pipe, are estimated at 1.65 million tonnes for the January-March quarter, down from an early forecast of 1.73 million tonnes, METI reported.