Japan: Crude steel output drops by 5% y-o-y in May'25

• Golden Week holidays cause y-o-y decline in May
  
  
• Production expected to drop significantly in CY'25
  
  

Mysteel: Symptomatic of what has so far been a very ordinary year for the Japanese steel industry, new data from the Japan Iron and Steel Federation (JISF) shows that crude steel production in May fell 4.7% y-o-y to 6.83 million tonnes (mnt), marking the second consecutive month that output declined y-o-y. The May result took the cumulative production volume during January-May to 33.83 mnt, down 5.2% compared with the first five months of last year, the JISF data show.

Of greater concern to the mills - and specifically, their raw materials suppliers - was the fact that daily crude steel production last month averaged only 220,400 tonnes (t), up by just 0.1% from April's average of 220,100 t/d.

Annualised out over a full year, the May daily average would make for a crude steel total this calendar year of about 80.45 mnt - much lower than the CY'24 result of 84.01 mnt. It would also be 7 mnt down from CY'23 and 9.2 mnt lower than in CY'22.

The y-o-y dip in May output could be partly attributed to some electric arc furnace (EAF) steelmakers halting operations to allow staff to enjoy their Golden Week of public holidays, which this year spanned 29 April through till 6 May. However, the spring holiday break does not explain the fall in January-May output, during which production via the blast furnace-BOF route totalled 25.01 mnt, down 4.2% y-o-y, and that of EAF producers fell by a larger 7.9% y-o-y to 8.82 mnt.

By product, output of all but four of the 20 carbon steel items the JISF tracks declined y-o-y during May, with the exceptions being sheet piles, heavy bars, ordinary wire rods, and cold-rolled coils (CRCs). During January-May, production of only three items increased - that of ordinary and high carbon wire rods, and CRCs.

Addressing Japanese media following a regular industry round-table conference held earlier this month, Nippon Steel executive vice president Takashi Hirose had little optimism to share.

"The impact of US trade policy has led to an increasing sense of uncertainty overall," he observed. "Trends in domestic demand sectors for steel materials are becoming increasingly negative, particularly the y-o-y decline in housing construction starts. The non-residential construction sector has grown, though this is due to the Osaka Integrated Resort and related demand," he suggested.

The Osaka IR is a massive resort complex being built on an island in Osaka Bay, combining a casino with three hotels, a sports area and other facilities, due to be completed in 2030, Mysteel Global notes.

"The automotive sector has improved from the low performance last year, but the current level is not necessarily high, while the overall trend in exports is, again, negative, including the volume of shipbuilding export contracts and the industrial machinery production index," Hirose said.

New data from the Japan Ship Exporters' Association show that in May, the Japanese shipyards received orders for just 13 vessels totalling 884,100 gross tons, lower by a huge 48% from May last year.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.