Japan's PMI softens in November amid gradual COVID-19 recovery

Japan's manufacturing activity slowed towards the end of 2021, with the purchasing managers' index narrowing to 54.3 from 54.5 in November amid a nascent recovery from the COVID-19 pandemic.

Despite the slowdown, the au Jibun Bank Japan Manufacturing PMI remained in expansion territory for a 10th straight month.

Nevertheless, Japanese goods producers were wary of the continued impact of the pandemic and supply chain disruptions as the omicron variant of the coronavirus continues to spread.

Amid the expansion, which is expected to continue into early 2022, the Ministry of Economy, Trade and Industry expects first quarter steel demand to reach 21.75 million mt, up 1.9% on the year and 2.6% higher than Q4 2021, mostly due to growth in domestic markets.

Local demand will account for about 14.93 million mt of Q1 2022 total, expanding 3.5% on the year and 3.7% from Q4 2021, due to support expected from the country's manufacturing and construction sectors.

METI was wary that the automotive sector could face a reaggravation in supply chains, in terms of semiconductor chips and automotive parts, which could then lead to a revision in production forecasts.

Likewise, the Japan Iron & Steel Federation expects this year's domestic demand for steel to increase from 2021, mainly from the manufacturing sector. However, it projects crude steel production in 2022 to be flat from 2021 due to risks posed by the new COVID-19 variants and disruptions in the global supply chain.