Steel mills in Japan increase exports

Japan's major steelmakers have been making higher profits recently as slower demand and inflated inventories have pushed them to sell more overseas, while exacerbating global glut and further price declines.

Nippon Steel & Sumitomo Metal and JFE Holdings previously said they expect sales to pick up in the construction and transportation sectors, but analysts were not so confident that the domestic market had strengthened enough to cut inventories, which reached a 13-year high in late September. Meanwhile, steelmakers began to slowly conquer overseas markets.

Keiju Kurosaka, senior analyst at Mitsubishi UFJ Morgan Stanley, said that “the biggest concern is the state of production of automakers. There is a risk that spot prices for steel products will enter a downward spiral. costs. They are more likely to intensify exports. "

Nippon Steel and JFE plan to increase steel production to 46.1 million tonnes and 29.2 million tonnes, respectively. These are the highest rates since 2007 until the start of the global financial crisis. Japanese exports of steel products rose for the first time in 13 months in September to 3,740,000 tonnes, competing with the flow of Chinese steel.

The sales tax imposed by Prime Minister Shinzo Abe in April has weighed on economic growth and consumer spending harder than expected, painfully cutting sales in two sectors most important to steelmakers, automotive and construction. Amid the harsh impact of tax hikes, the Bank of Japan surprised the global financial community by expanding stimulus spending. The effectiveness of these measures will only become clear over time.