Reuters reported that Japanese steelmakers are bullish in their output plans for this quarter, counting on demand related to post quake reconstruction to mostly offset weakness in the auto sector.
Some analysts warned, however, that a large portion of this quarter''s production may eventually end up as exports given the overall soft tone of demand in the domestic market.
A poll by Japan''s trade ministry of about 60 big Japanese steelmakers showed they plan to produce 26.89 million tonnes of crude steel in the April to June 2011 quarter, down by 2.8% from the previous quarter''s 27.68 million tonnes and a decline of 4.2% from the same period last year.
The steel output plans are relatively robust given that Japanese carmakers, which take up 30% of domestic steel shipments, are producing at only 50% of their targeted volumes after the March 11th 2011 earthquake and tsunami severely disrupted manufacturers'' supply chains.
Japan''s new vehicle sales in April 2011 halved to their lowest monthly tally on record, as domestic automakers felt the full brunt of the unprecedented disaster.
Mr Takashi Murata, analyst at Daiwa Securities Capital Markets, said that "Car production could dip again in June or July after manufacturers run out of stocks of parts. A large portion of steel production will eventually end up in export markets."
The trade ministry said steelmakers are boosting output of long products such as H beams, bars and sheet piles used in construction works, which will mitigate a steep fall in automotive sheet output.
The survey showed that output of sheet piling used in construction work will jump 35.8% from the previous three months, while galvanized automotive sheet will fall about 30%.
Mr Masaki Koito, director of the ministry''s Iron and Steel Division, said that "Still, the April to June 2011 period output decline was much smaller than we had expected."
Nippon Steel Corporation and JFE Steel, whose mills were largely unscathed by the disaster, have said they may step up exports to Asian emerging markets depending on the level of demand at home.
( Source: www.steelguru.com )