Orders booked at Japanese steel mills recovered slightly in March, but were not enough to prevent a fall in orders over the financial year ending March 2016. Domestic orders are expected to see a modest recovery in the current financial year, but this could be cancelled out by weaker exports, Kallanish notes.

March’s total orders were up 9.3% month-on-month and 5.1% year-on-year at 6.24 million tonnes, according to the Japan Iron and Steel Federation (Jisf). Domestic orders were up 3.2% y-o-y at 3.68mt, and export orders were up 8.3% y-o-y at 2.49mt.

The still left total and domestic orders down over the financial year ending March 2016 however. Total orders were down -2.1% at 69.57mt, while domestic orders were down -3.6% at 42.46mt. Export orders were up 2.6% over the year at 26.32mt, although this data does not cover all Japan’s steel exports, which had already totalled 37.63mt (down -2.1% y-o-y) over April 2015-February 2016.

Although domestic demand increased in March, there were some troubling signals. Unlike most major steel economies, manufacturing demand is more significant than construction demand in Japan and this sector had a poor month. Total manufacturing demand was down -0.5% from February and up just 0.7% y-o-y at 1.51mt in March as automotive demand took another hit. Over the financial year manufacturing steel demand was down -3.9% to 18.7mt.

This was made up for by strong growth in construction however. A sharp increase in residential construction helped push construction demand up 14.8% m-o-m and 7% y-o-y in March to 1.04mt. Over the financial year, construction demand was still down -6.1% at 11.08mt however.