Shocking Revelation: Japan's Crude Steel Production Predicted to Remain Under 90 Million Tons in FY23/24, According to Industry Leader

Japan's Crude Steel Production Outlook and Green Steel Initiatives

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Japan, the world's third-largest producer of steel, is anticipating its crude steel production to remain below 90 million metric tons in the upcoming fiscal year until March. This projection is primarily attributed to subdued local demand stemming from various sectors, as highlighted by Yoshihisa Kitano, Chairman of the Japan Iron and Steel Federation and President of JFE Steel, during a recent press conference.

Kitano acknowledged a hopeful upswing in domestic steel demand for automobiles due to improved chip supply. However, he cautioned that other segments of the industry were experiencing sluggish demand. Notably, construction projects have been affected by labor shortages and soaring material costs, causing delays in large-scale undertakings.

This revised forecast marks a departure from Kitano's earlier estimate in May, which ranged between 90-95 million tons. It contrasts with the 87.85 million tons produced in the previous fiscal year ending on March 31, 2022.

Kitano also expressed concerns about the lackluster conditions in the export market. He pointed out that China's steel production and exports remained robust despite its economic slowdown, leading to a challenging global landscape for steel exports. He conveyed a lack of optimism regarding a swift turnaround in this regard.

In a recent development, Japan's Ministry of Industry unveiled an ambitious plan to significantly increase financial support for the steel industry. Their goal is to expedite the development of "green steel," which focuses on reducing carbon dioxide emissions during the steel-making process through hydrogen utilization. The government intends to allocate nearly 450 billion yen (approximately $3 billion) for this initiative, a substantial increase from the previous support of 190 billion yen.

While expressing appreciation for this increased funding, Kitano emphasized that it may still fall short of the support provided in other countries. He underscored that the transition to low-emission steel production using hydrogen, though promising, presents numerous technological challenges that require sustained investment and innovation.

Source: Reuters (Reporting by Yuka Obayashi)