Coronavirus impact pressures Japanese steel output

The impact of the coronavirus outbreak has begun eating into demand for steel materials from Japanese car manufacturers, adding further pressure on Japan's falling steel output.

Steel demand outlook is facing added uncertainty after Japanese car producers were forced to reduce output in Japan and in China amid the coronavirus outbreak, industry group Japan iron and steel federation chairman Yoshihisa Kitano said yesterday. Kitano, also president of Japanese steel producer JFE Steel, said his company has adjusted lower shipments of steel materials to meet reduced demand from Japanese car producers.

JFE Steel in early February said it was keeping its crude steel output target at 27mn t in the April 2019-March 2020 fiscal year, up by 3pc from 2018-19, while projecting shipments of steel products to remain flat.

Japanese car producers had been forced to close their assembly plants in China since late January for an extended period as China continued its battle against the coronavirus outbreak. Most of the plants have since resumed operations but at reduced rates. Japanese car producers said their January car output was not affected by the coronavirus outbreak but their February output is expected to fall amid the plant closures.

Global car output by Japanese car manufacturers fell by 9pc from a year earlier to 2.2mn in January, pressured by a 12pc contraction in overseas output. Domestic car output also dropped by 3pc to 726,321.

The federation will continue closely monitoring Chinese steel output, said Kitano, which continues at an increased rate despite weakened manufacturing activity after Beijing took measures to rein in the outbreak. The federation in October last year joined global steel associations in calling for urgent action to tackle excess steel capacity, particularly in China.

Japan's crude steel output last year dropped to the lowest level in 10 years, also falling below 100mn t for the first time since 2009. Kitano hinted Japanese steel production could further fall in 2020 if an extended coronavirus impact pressures steel demand.

By Rieko Suda