Recent Market Development in the Japanese Steel Industry The Japan - - PowerPoint PPT Presentation

Recent Market Development in the Japanese Steel Industry

The Japan Iron and Steel Federation (JISF) 86th Session of the OECD Steel Committee, Paris 25-26 March 2019

Japan’s whole economy has improved slightly supported by recovering domestic demand

1

Evolution of real GDP

Source: Cabinet Office

2.2

• 2.6

1.4

(16.0) (12.0) (8.0) (4.0) 0.0 4.0 8.0 12.0 14.1Q 3Q 15.1Q 3Q 16.1Q 3Q 17.1Q 3Q 18.1Q 3Q %

Contributions to percent change in real GDP

Change in public inventories Net exports of goods and services Public demand Private non-resi. investment Private residential investment Private consumption GDP (sa, annualised)

60 70 80 90 100 110 120 130 140 14.1 7 15.1 7 16.1 7 17.1 7 18.1 7

2015=100Domestic demand (sa)

Domestic demand 60 70 80 90 100 110 120 130 140 14.1 7 15.1 7 16.1 7 17.1 7 18.1 7

2015=100

Exports (sa)

Exports

Supply-side issues (e.g. natural disasters) have made Japanese steel firms difficult to meet foreign demand

2

Evolution of ordinary steel orders

Source: JISF Natural disaster type Location Month Earthquake Osaka June 2018 Torrential rain Western Japan July 2018 Earthquake Hokkaido September 2018 Typhoon No. 21 Western Japan September 2018

24.5 25.0 25.5 26.0 26.5 27.0 27.5 28.0 28.5 14.1Q 3Q 15.1Q 3Q 16.1Q 3Q 17.1Q 3Q 18.1Q 3Q Million tonnes

Crude steel production

Crude steel production

The lower output was not due to a slowdown in domestic demand, but rather from supply-side constrains (e.g. natural disasters)

3

Evolution of crude steel production

Source: JISF calculation based on data from METI

CY 2016 CY 2017 CY 2018 Million tonnes 104.8 104.7 104.3

Japan’s steel demand is expected to remain stable in FY 2019, with a slight change in manufacturing sectors

4

Outlook

+0.6 0.0 +0.2

Sectors FY 2017 FY 2018 FY 2019 Million tons Ordinary steel 49.75 49.51 49.34 Construction 21.67 21.28 21.34

(Civil engineering)

6.85 6.70 6.96 (Building) 14.82 14.59 14.38 Manufacturing 28.08 28.23 28.00 (Shipbuilding) 4.08 4.03 4.03 (Automotive) 11.31 11.33 11.13

(Industrial machinery)

5.05 5.22 5.28

(Electrical machinery)

3.10 3.10 3.07 Special steel 13.14 13.41 13.29

Source: JISF

FY 2019 Y-o-Y %

• 0.4

0.3 4.0

• 1.5
• 0.8

0.0

• 1.8

1.1

• 0.9
• 0.9

Global steel market conditions have improved since 2016

5

Development of the global steel market (1)

Source: JISF calculation based on data from OECD

Establishment of GFSEC (2016)

60 65 70 75 80 85 200 400 600 800 1000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % USD/tonne World capacity utilisation rate and HRC price HRC price (LHS) CUR (RHS)

... and there was a temporary breathing space in trade friction in 2017

6

Development of the global steel market (2)

Source: JISF

39 39 18 24 5 7 5 5 10 15 20 25 30 35 40 45 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of steel AD/SG investigations (world)

AD SG

The global steel industry needs to make efforts to promote the viability of the steel industry

7

Efforts to promote the viability of the steel industry

Avoid unfair trade Prevent: the ・the revival of excess capacity ・the creation of new excess capacity Meet quantitative / qualitative demand from customers

8

Thank you for your attention