By Yuka Obayashi
TOKYO (Reuters) -Crude steel output in Japan, the world’s No.3 producer, fell 4.4% in June from a year ago, marking a third straight month of annual decline, weighed down by sluggish local demand and weak exports amid high shipment volumes from top producer China.
Output, which is not seasonally-adjusted, dropped to 6.72 million metric tons, the Japan Iron and Steel Federation said. Production was also down 1.7% from May.
An analyst at the federation said that the decline reflects weak demand in Japan from industries such as automotive manufacturing, along with rising material costs and ongoing labour shortages that continue to hamper construction activity.
Sluggish export demand is also dampening production, the analyst said, though the direct impact of U.S. tariff hikes on steel is limited as Japan exports only about 1 million tons to the U.S. market annually.
China’s steel exports in June fell 8.5% from May to a four-month low of 9.68 million tons, but total outbound shipments in the first half rose 9.2% year-on-year to an all-time high of 58.15 million tons, as steelmakers boosted exports ahead of expected demand weakness from U.S. tariff increases.
Japan’s steel output in the first six months fell 5% to 40.55 million tons, the lowest for the period since 2009, when the global financial crisis hit demand, according to the federation’s analyst.
“While production rebounded quickly after the 2009 financial crisis, the current slump shows no signs of recovery and appears more serious,” the analyst said.
Earlier this month, the Ministry of Economy, Trade and Industry projected that Japan’s crude steel output will fall 2.3% in the July-September quarter from a year earlier.
(Reporting by Yuka Obayashi. Editing by Jane Merriman)
