Projected Recovery in Japan's Crude Steel Output in FY 2025, IEEJ Reports

IEEJ

Japan is poised for a rebound in crude steel production in the fiscal year 2025, driven by an upturn in broader domestic industrial sectors such as automotive, electronics, and industrial machinery, as per the latest forecast from the Institution of Energy Economy Japan (IEEJ).

Growth in Domestic Industries Fuels Steel Production

According to the IEEJ's projections announced on December 24, Japan’s crude steel output is anticipated to increase by 4.1% year-on-year to 86.5 million tons in FY 2024-25. This marks the first annual growth in four years, signaling a significant recovery in the sector. The uptrend in domestic car production, expected to rise by 1.8% to 8.9 million units, is a key factor contributing to this resurgence. Furthermore, investments in digitalization and green technologies are expected to support sustained demand for steel throughout the forecast period.

Export Outlook and Challenges

The IEEJ also expects a modest increase in Japan's steel product exports by 1.2% year-on-year, following positive trends in the global manufacturing sectors. This comes after Japan exported approximately 32 million tons of steel products in the previous fiscal year, as reported by the Japan Iron and Steel Federation (JISF).

Despite this optimistic forecast, the steel industry has faced challenges such as rising material costs and labor shortages, which have impacted the construction sector and dampened steel demand. Additionally, operational disruptions at major automotive manufacturers like Toyota and Daihatsu, due to issues with safety test reporting, have further strained demand. These factors have contributed to a protracted period of decline in steel orders, particularly for automobile manufacturing, with a tenth consecutive month of year-on-year decline observed in October.