Japanese steel industry
Now, let’s analyze the steel market conditions in Japan. Japan is a major steel exporter. It exports steel in direct and indirect forms. You can learn more about steel imports in our series Dynamics of US steel imports. The Japanese economy has been stagnant for several years. Japan’s Prime Minister, Shinzo Abe, is working to boost the Japanese economy with “Abenomics.”
The policy targets fiscal, monetary, and structural policies to pull the country out of years of deflation and a lack of growth. The Japanese steel industry also benefited from Abenomics. In Japan, steel production picked up as a result of the policies. A weaker yen also benefited Japan.
The above chart shows Japan’s steel production. As you can see, steel production fell by 4% in January. The fall in Japanese steel production is negative for the global steel industry. It reflects a slowdown in manufacturing activity in Japan.
Japan is hosting the 2020 Olympics. This should benefit the Japanese steel industry. China hosted the 2008 Olympics. It built a huge amount of infrastructure in the preparation process. The Chinese steel industry benefited from higher infrastructure spending.
Steel companies—like Steel Dynamics (STLD), ArcelorMittal (MT), and AK Steel (AKS)—benefit from higher infrastructure spending. The Japanese steel industry should also benefit from higher infrastructure spending. However, the scale of spending in Japan could be much less because it’s already a developed economy.
Developing countries—like India—are also major players in the global steel industry. We’ll discuss this in the next part of this series.