Japanese crude steel production in the July-September quarter could see another year-on-year increase, according to a survey by the Ministry of Economy, Trade and Industry (Meti). The sudden strengthening on the Japanese yen since Brexit could threaten domestic demand however, Kallanish notes.

The industry survey suggested crude steel output could be up 0.6% from a year earlier to around 26.36 million tonnes over July-September. Output over April-June was estimated up 1% year-on-year, which would leave it at around 26.12mt.

A recovery in civil engineering and automobile production should boost demand, respondents said. Automotive output is recovering after disruptions following the earthquakes in Kumamoto earlier this year.

Japan’s carmakers are facing a currency problem however. As the yen devalued they moved some production from plants abroad back to Japan. The yen is now increasing in value and has jumped another 2% to just over 100 JPY/USD since the UK voted to leave the EU on 23 June. If carmakers move that production abroad once more, domestic steel demand could be undermined.