- Language: English
- 503 Pages
- Published: October 2012
- Region: Global
Japan Metals Report Q4 2009
- Published: October 2009
- Region: Japan
- 45 Pages
- Business Monitor International
Japan Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Japan's metals industry.
Japanese metals producers saw the market downturn ease in Q209 and Q309 as destocking was completed and demand revived with month-on-month (m-o-m) growth, but BMI’s latest Japan Metals Report warns that over-capacity in Asia with massive growth in Korean capacity could thwart a full recovery to prerecession levels in the near term.
The Japanese economy emerged from recession in Q209, but domestic demand remains weak and there is uncertainty over whether an export recovery driven by global government stimulus efforts is sustainable. In the first eight months of 2009, Japanese crude steel output was down 36.0% y-o-y to 52.66mn tonnes. As BMI predicted in our previous quarterly report, the trend in crude output is upward, with no cuts expected in H209. In August output was up 8.5% m-o-m to 8.31mn tonnes, 51.6% up over the low-point seen in February, indicating that the industry was making a steady recovery. However, output was still down 18.3% year-on-year (y-o-y) in August, demonstrating that the industry was far from returning to pre-recession levels.
Strengthening Asian demand as a result of government stimulus spending has provided a short-term boost to steel exports. However, with export markets accounting for 40% of Japanese steel exports and Asia comprising 75% of exports, rapid steel capacity expansion in the region, led by South Korea, is a significant threat to Japanese mills. Automotive sheet steel and shipbuilding plate are the two areas where the country’s competitors are likely to cause the most problems due to the slump in both sectors as the Korean market becomes less dependent on imports from Japan.
Uncertainty over demand in Q110 means that JFE Steel Corporation and Nippon Steel have been reluctant to reopen idled capacity despite approaching full capacity utilisation. By Q309, JFE still had two of its nine blast furnaces shut, although Nippon Steel had restarted its largest blast furnace in Oita by September and was planning to restart its No.2 blast furnace at Kimitsu in October having suffered problems in restarting the No.3 blast furnace – the No.1 blast furnace has remained operational. Growth in 2010 will be stunted by the competitive regional environment, although much will depend on the strength of the Japanese yen against the Korean won. BMI believes that this will be partly offset by rising domestic demand. However, while the Japanese automotive industry will see growth of 1.1% in 2010, this will be cancelled out by a 1.9% contraction in the construction industry. It will take until 2013 before the industry is back to near where it was in 2008, with crude output exceeding 116mn tonnes. For H109, the Japan Aluminium Association stated that Japanese demand for aluminium ingot and rolled products deceased by 35.5% y-o-y to 1.43mn tonnes, the lowest level since 1986 and that rolled products fell 30.0% y-o-y to 725,382 tonnes. The association said that it expects demand for the fiscal year (to March 2010) of about 1.7mn tonnes for flat rolled and extrusion aluminium products, down 15% y-o-y.
An aggressive cut back in inventories may put base metals at risk of sharp rises in prices when demand recovers more strongly.
Even when demand returns, BMI does not expect average run rates to exceed 70% over the medium term, which means that aluminium smelting output is likely to run at around 750,000 tonnes per annum. We do not envisage Japanese demand for new cars and houses, which had previously driven up aluminium consumption, to return to pre-recession rates over the medium term. Japanese secondary aluminium alloy smelters are increasing seeking to export alloys to China, with Chinese spot domestic prices holding firm in Q209 compared with Japanese prices; in March, Chinese ADC12 alloy prices were trading at around US$1,800-1,900 per tonne, while Japanese prices were around US$1,350 which is close to production cost. SHOW LESS READ MORE >
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