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Japan Metals Report Q1 2010
Business Monitor International, Dec 2009, Pages: 49
The 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.
The Japanese metals market has succumbed to a global economic landscape that has been both treacherous and unforgiving. With record drops in consumer trends, manafacturing and overall production the Japanese metals sector has had to alter its entire business model in order to acclimatise to a market that is a shadow of its former self. Forecasts paint a largely bleak scenario and coupled with a strengthening currency, Japan has had to shift much of its focus abroad in order to stake a claim in a metals marketshare that has become increasingly intent on seeking cheaper alternative suppliers. From a Japanese perspective the global recession has forced the market to diversify its portfolio and become more innovative in order to maintain any of the respectability it once held within an ever increasingly bleak metals marketplace. With steel output for October 2009 rising 6.4% in comparison to the previous month, the figure still marked an overall decline of 12.9% compared with the same month in 2008. As reported by Reuters, Japanese crude steel output for the month of October weighed in at 8.79mn tonnes, marking 13 straight months of decline. For 2009, the report forecasts that output will reach 88mn tonnes, representing a fall of 25%. We do not expect output to return to pre-crisis levels until 2014 at the earliest. However, some respite for the larger manufacturers has been forecast, at least in the shorter term, with the announcement by the Japan Iron and Steel Federation that global stimulus measures have boosted overall steel demand in China, as well as in activated car and electronics factories in Japan, which they feel will benefit more high profile steelmakers such as JFE Holdings Inc and Nippon Steel Corp.
Although this forecast might offer relief within the sector in the short term, there are concerns that this momentum will be slowed due to oversupply from nations such as China once stability is restored to the markets. As companies begin to restock after aggressively altering inventories to cope with a plunge in global demand, it is clear – with manufacturers having significantly increased output over the past quarter – that the Japanese sector is keen to take advantage of any spike in demand. On the back of negative forecasts for the Japanese sector, Japan’s JFE Steel Corp announced that it would form an alliance with India’s third largest domestic steel maker JSW Steel, acquiring a 10% stake in the Indian company.
As reported by the India Times, overall demand for steel within India is still strong-backed, largely by the Indian economy beginning to show signs of recovery on the back of the government extending support through stimulus packages to safeguard the domestic manufacturing industry. This multinational investment trend was carried forward in Q110 when Nippon Steel Corporation made the move to invest in Indonesian-based brand Latinusa as part of its global player strategy, with the objective of tapping into the vigorous tinplate demand currently being witnessed within the Asian region. As a result, Nippon Steel will acquire control of Latinusa, which will become a subsidiary of the Japanese steel giant.
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