Nippon Steel assesses the impact of new sales tax on demand

Japan's largest steelmaker, Nippon Steel & Sumitomo Metal Corp, foresees only short-term impact on demand, not long-term damage from the sales tax imposed in April by the Japanese government as a stimulus, as its new president, Kosei Shindo, withered.

Kosei Shindou is currently executive vice president of Nippon Steel and believes that "the tax hike could affect steel demand in the April-June period, but we are not worried about the impact throughout the entire fiscal year."

Japan's national sales tax increased to 8 percent in April from 5 percent to dampen consumer spending by affecting demand for cars and homes. Its impact is currently being closely monitored as a test of Prime Minister Shinzo Abe's stimulus measures at the end of nearly two decades of economic stagnation and deflation in Japan.

Shindou, who will take over as president of Nippon Steel from April 1, 2014, said additional budgetary and other government programs to stimulate consumer spending are likely to offset the negative impact.

A year of monetary stimulus and budgetary spending under the so-called Abenomics policy has already led to a surge in demand in construction, as well as corporate events that have also helped boost overall demand for steel. Nippon Steel's profit is forecast to rise 5 percent to 45.80 million tonnes, hitting a 6-year high.