Consumption of ordinary steel by Japanese shipbuilding sector is forecast to tumble by 21pc in FY2020 to 2.65mn mt from the prior year, according to Shipbuilders’ Association of Japan (SAJ). The sector is badly hit by the COVID-19 pandemic as the country has received very few new shipbuilding orders this fiscal. Overall domestic steel demand also remains weak due to reduced exports and a slump in the auto sector.
Japanese shipbuilding industry is a major steel plate consumer. Steel consumption was on an uptrend since FY2017 but in FY2020 (April 2020- March 2021) steel consumption is likely to drop below 3mn mt for the first time in the last 18 years, according to SAJ data.
Demand for ship plates in FY2020 is projected at 2.3mn mt, down about 27pc from 3.15mn mt in 2019.
In the Jan-July period, the number of new shipbuilding orders in Japan nosedived by 55.8pc, according to the Japan Ship Exporters Association. The country exported 74 ships from Jan-July against 116 ships in the prior year period. The volume of ships exported totalled 3.4mn gt.
Steel production to recover in H2
Japanese steel mills have projected recovery in steel output in July-Sep period. Leading mills including JFE and Nippon Steel expect crude steel production to revive driven by rising auto demand. These mills have ramped up their productions. The country’s crude steel output totalled 6mn mt in July up by 8pc from June, while down by 28pc from July 2019.