Japan’s balance of steel trade worsened further in July, with exports falling and imports increasing both year-on-year and from the previous month, according to Japan Iron and Steel Federation (JISF) data seen by Kallanish. The decline comes as Japan struggles to compete with other exporters, notably China, where it does not have captive customers.

In July Japan exported 3.33 million tonnes of steel and imported 779,498t, down 8.44% and up 17.56% respectively. Over the first seven months of the year, it exported 24.11mt and imported 5.65mt.

Japan’s export decline comes at a time when global demand is recovering, especially in the developed economies. South East Asia and Korea have also seen imports increase significantly this year.

Japan’s inability to benefit from this demand may be due to the extremely competitive Chinese export prices. Chinese domestic steel demand was actually down slightly year-on-year over January-July and the country has been exporting its excess supply.

Chinese steel exports surged 37% y-o-y to 49.1mt in the first seven months of the year and were more than double those of Japan. Even Japan’s imports of Chinese steel doubled y-o-y in July, albeit only to 58,357t.

In the face of this onslaught it is perhaps impressive that Japan’s exports have not decreased more significantly. Their resilience is in part due to the captive customers the country’s mills enjoy in Japanese-invested manufacturers in Southeast Asia, especially automotive producers and steel re-rollers.

Japan’s main steel export by volume remains hot rolled coil, of which it exported 922,516t in July and 6.38mt so far this year.