TOKYO: Japan’s crude steel output fell 4.9 per cent in July from a year earlier to 8.84 million tonnes, booking an 11th straight month decline and hitting a six-year low for the month, as slumping demand and high inventories forced steelmakers to cut output.
The slump underlines the latest in a series of signs of economic slowdown, adding pressure on Prime Minister Shinzo Abe to lift the economy out of decades of deflation.
In April-June, the Japanese economy shrank at an annualised pace of 1.6 per cent as exports slumped and consumers cut back spending.
Japan’s monthly crude steel production has been on a downtrend since late last year, weighed down by languid consumption of cars and houses after a sales tax hike in April 2014, which caused a rise in stockpile of steel products.
Depressing export margins due to plunging steel prices in Asia, hit by massive exports from China, also led Japanese steelmakers like Nippon Steel & Sumitomo Metal Corp and JFE Steel, a unit of JFE Holdings Inc, to slash output.
The drop in July’s output, however, came slightly below a 6.1 per cent fall predicted by Japan’s trade and industry ministry last month for crude steel production for July-September.
The July output of 8.84 million tonnes marked the lowest for the month since 2009 when a global financial crisis battered demand, a researcher at the Japan Iron and Steel Federation said. Output, which is not seasonally -adjusted, climbed 3.6 per cent from June.
Domestic inventory of steel products, except for specialty steel, fell 2.1 per cent in June from a year ago and 2.7 per cent from the previous month, but an inventory turnover ratio stood at 147.1 per cent, above 120 per cent which is seen to be a healthy level, the researcher said.
