Japanese crude steel production recovered slightly in October 2014 but remained down year-on-year, according to the Japan Iron and Steel Federation (Jisf). A sharp month-on-month increase in hot rolled coil output was apparently driven by the hope of better exports, Kallanish notes.

Japan produced 9.36 million tonnes of crude steel in October, the highest monthly figure of the current financial year starting April 2014, Jisf says. It produced 8.46mt of hot rolled steel, the highest output this financial year. The 64.92mt of crude steel produced since April was still down 0.6% y-o-y, but hot rolled production was up 1.1% to 57.33mt.

Hot rolled coil output was the main beneficiary at 3.86mt, up 6.6% month-on-month and 5.8% y-o-y. Local media reported that this growth was due to increased opportunities for export.

Japanese steel exports have fared poorly so far this year despite the steadily weakening Yen. Over April-September, steel exports were down 3.9% y-on-y to barely over 21mt.

The unexpected announcement that Japan has entered recession, and the consequent extension of quantitative easing, delay of a consumption tax hike and early elections have hit the Yen further. This theoretically makes Japanese steel exports more competitive, Kallanish observes. The exchange rate approached Yen 119 to the dollar on Thursday, before falling back to the mid-117s on Friday. The Yen has not been this weak since 2007.

Japanese exporters may also be looking forward to a possible disruption to Chinese exports in January (see related article). A weak yen and a fall in Chinese exports in the new year, may mean they can finally begin to gain from Abenomics, the inflationary policy of prime minister Shinzo Abe.