Japan’s steelmakers saw orders rebound in September after a very weak August. Orders remained down sharply year-on-year, however, and steelmakers will be hoping their long-awaited recovery picks up pace later in the year despite the economy entering another recession, Kallanish notes.

Total orders received in September were up 1.7% from August to 5.56 million tonnes, but were still down -5.3% from a year earlier, according to the Japan Iron and Steel Federation (Jisf). Most of the gain came from export orders, however, which were up 3.9% month-on-month to 1.97mt. Domestic orders were up just 0.6% from August and were down -7.1% year-on-year at 3.53mt.

End user construction demand recovered 4.9% from August to 902,000t, but was still down -16.2% y-o-y in September. Manufacturing demand was down m-o-m but relatively stable y-o-y. In particular, automotive demand was down -8.2% m-o-m and -3.5% y-o-y at 727,000t.

Japan’s steelmakers have put themselves in a strong position by reducing output and inventories in the domestic market. Combined with a devalued currency they stand to gain when domestic demand recovers, as they have been predicting for the last six months. That recovery will have to pick up pace if steelmakers are to succeed in restoring production to normal levels without boosting inventories again.

Economic data published on Monday casts doubts on that recovery, however. The latest gdp data showed a -0.8% y-o-y fall in July-September, following a -0.7% y-o-y decline in the previous quarter. The two consecutive quarters of decline put Japan officially in recession for the fifth time in seven years.