Japanese crude steel output was up just 0.06% year-on-year in 2014 to 110.67 million tonnes, according to the latest release from the Japan Iron and Steel Federation (JISF). The lack of growth came as Japan struggled to compete in the international steel markets against a flood of steel from China but 2015 could be a better year for Japanese exporters, Kallanish notes.

The overall figures masked a 0.81% fall in converter steel output to 84.99mt, while EAF steel output was up 3.06% to 25.68mt. This was accounted for mainly by a shift towards special steel production at EAFs. Special steel output was up 3.28% y-o-y to 25.3mt while ordinary steel output fell 0.85% to 85.37mt.

Japanese steel demand has struggled in the face of an increase in consumption tax in April 2014, which helped send the country into recession. A second tax hike due in April 2015 has been postponed.

Japan’s exports have been aimed largely at captive customers, Kallanish observes. Japanese steelmakers have continued to send steel to re-rollers in Southeast Asia, often where Japanese automotive companies have their factories. The spot market however has been rocked by the massive increase in exports from China, where demand is struggling and falling iron ore prices have spurred production.

2015 may see a change in direction for Japan’s flaccid exports. Japan’s EAFs are expected to have another good year as falling ferrous scrap prices finally catch up with the dramatic collapse of iron ore in 2014. This not only gives them a relative advantage over Japanese integrated steelmakers, but also over China’s iron ore-reliant industry, Kallanish notes.