Japan’s manufacturing industry continues to slump, steel demand under pressure, import resources increase, affecting market

The outlook for Japan's SA387 Grade 22 steel manufacturing industry continues to decline, with weak market demand dragging down steel consumption. The Purchasing Managers' Index (PMI) for Japan's manufacturing industry in February 2025 was 49, slightly higher than January's 48.7, but still in a contraction range, indicating that the overall performance of the manufacturing industry is still sluggish. Domestic factory production in Japan has been declining for six consecutive months, with weak order growth in major manufacturing industries and overall market sentiment being cautious. Affected by the global economic slowdown, Japan's export orders are under pressure, and domestic terminal demand has not shown significant improvement, especially in key downstream industries such as automobiles and machinery manufacturing where the recovery momentum is insufficient, which has constrained steel demand.

The construction steel market has shown weak performance. Mainstream SA387 Grade 22 steel Japanese steel mills such as Tokyo Iron and Steel have stated that since early February 2025, demand has remained sluggish, terminal procurement has become cautious, and some infrastructure and real estate projects have slowed down, affecting steel consumption. At the same time, the increase in imported resources has intensified market competition, especially with a significant increase in steel supply from China.

According to data released by The Japan Iron and Steel Federation on February 28th, Japan imported 92272 tons of steel from China in January 2025, compared to 53555 tons in January 2024, a year-on-year increase of 72.3%. The growth of imported resources has an impact on the supply pattern of the domestic market in Japan, and some local steel mills are facing significant market pressure, leading to cautious sales strategies.

Under the dual impact of weak SA387 Grade 22 steel demand and intensified import competition, mainstream Japanese steel mills have successively lowered their production expectations for the 2025 fiscal year, and the overall supply strategy has become more conservative. Previously, the Ministry of Economy, Trade and Industry of Japan predicted that Japan's crude steel production in the first quarter of 2025 is expected to decrease by 2.4% year-on-year to 20.93 million tons, further lowering the previous estimate. Industry sources indicate that Japanese steel mills are accelerating the adjustment of production pace to optimize inventory management and respond to changes in market demand. The subsequent market trend still needs to pay attention to the recovery of terminal demand and changes in the flow of imported resources.