Japan predicts falling steel production for first time in 3 years - METI

Steel output in Japan is expected to decline 0.7 percent to 110.7 million tonnes in the current fiscal year, which ends in March 2015. The Ministry of Economy, Trade and Industry (METI) said the decline was observed for the first time in 3 years, as demand slowed down with the increase in sales tax.

Steel production grew last year, driven by strong demand from the automotive and construction industries ahead of the introduction of the sales tax, which came into effect on April 1, 2014. Takanari Yamashita, head of the iron and steel division at METI, said: "It's still not a bad result, it still exceeds 110 million tonnes." According to Yamashita, demand in the shipbuilding and industrial engineering sectors is helping to offset weak demand from the auto and construction industries.

The ministry predicted that steel production in January-March 2015 would fall 1.0 percent from a year earlier to 27.30 million tonnes, the lowest quarterly output since January-March in 2013.

Yamashita said the decline in production reflects the lack of a spurt in demand in 2014. He also said metallurgists are becoming cautious because domestic demand from construction and vehicles was weaker than they expected in the fall.

The third largest economy in the world suddenly slipped into recession. Gross domestic product contracted 1.6 percent year over year between July and September following a rise in sales taxes that drive up consumer spending.