Japan's crude steel output falls for second straight month in Feb

Japan's crude steel production fell for the second straight month in February to 7.30 million mt, down 2.3% year on year and 5.9% month on month, data from the Japan Iron and Steel Federation showed March 22, as domestic manufacturing slowed.

The au Jibun Bank Japan Manufacturing Purchasing Managers Index fell to 52.7 in February, from 55.4 in January. The February reading showed the weakest growth in factory activity since September 2021, pressured by COVID-19-led restrictions and supply chain disruptions.

Reduced activity in the automotive sector was among the factors that led to a slowdown in manufacturing activity. Toyota Motor Corp. shut seven lines at six plants over Feb. 1-19 because of a shortage of parts due to supply chain disruptions and a lack of semiconductor chips.

Toyota has said that it plans to shut 18 lines at 11 plants over March 21-March 23 and eight lines at six plants from March 24-March 25, with one of its production lines remaining closed from March 22-March 31.

Japan's February pig iron production also fell 4.5% year on year and 9.8% month on month to 5.23 million mt, according to the data.

The country's output of hot-rolled products of ordinary steel declined 1.5% year on year and 4.6% month on month to 4.98 million mt in February, with hot-rolled wide strips down 4.5% year on year and 4.4% month on month at 2.93 million mt, the data showed.

The second quarter is also expected to see a slowdown in manufacturing, as Toyota expects to start its fiscal year 2022-23 (April-March) with a vehicle shortfall of 150,000 units globally.

Global steel prices are likely to climb despite the negative outlook, due to the war in Ukraine that has led end-users to look for alternatives to steel coming from Russia and Belarus.

The European Commission, effective April 1, will redistribute steel quotas for hot-rolled sheets and strips previously allotted to Russia and Belarus, to countries, such as Turkey, India, Republic of Korea, UK, Serbia and others, S&P Global Commodity Insights reported earlier.

"For the time being, the situation in Russia and Ukraine will have a major impact on the international market, and the upward trend in steel prices is certain," Tokyo Steel Manufacturing said March 22.