July 8, 2020 / 8:30 AM / a month ago

UPDATE 1-Japan July-Sept crude steel output to drop to 11-yr low on COVID-19 shock

* Output to fall 27.9% in July-Sept from a year earlier

* Demand from automakers, other industries is seen to dip

* Exports in July-Sept to hit the lowest since 2009 (Adds details and comments)

By Yuka Obayashi

TOKYO, July 8 (Reuters) - Japan’s crude steel output is forecast to fall 27.9% in July-September to an 11-year low as the coronavirus pandemic continues to weigh on demand from key buyers such as automakers, the Ministry of Economy, Trade and Industry said on Wednesday.

“We don’t know whether output and demand would hit the bottom this quarter as the coronavirus cases are still rising in Japan and abroad,” Tomoya Hasui, director of the METI’s metal industries division, told a news conference.

The ministry estimated crude steel output to be 17.70 million tonnes in July-September, compared with 24.55 million tonnes a year earlier. The previous eight quarters also saw year-on-year declines.

Crude steel output in the world’s third-biggest steel producer is forecast to have dropped to 18.29 million tonnes in April-June from 26.12 million tonnes a year earlier, missing METI’s April forecast of 19.36 million tonnes.

The estimated output for the current quarter is down 3.2% from the previous quarter and will mark the lowest since January-March 2009, during the depths of the global financial crisis.

Demand for steel products, including those for exports, is forecast to drop 24.3% from a year earlier to 17.28 million tonnes in July-September, the ministry said, citing an industry survey.

Steel used for automobiles, shipbuilding and industrial machineries will be the hardest hit, slumping by 24-33% from a year earlier.

Exports are forecast to decline 28.6% to 5.3 million tonnes, the lowest since April-June 2009.

To cope with dwindling demand, steelmakers have been cutting production.

Japan’s top two steelmakers, Nippon Steel Corp and JFE Steel, owned by JFE Holdings Inc, have announced plans to temporarily shut a total of seven blast furnaces by end-July, reducing capacity by 25% to 30%. (Reporting by Yuka Obayashi; Editing by Jacqueline Wong and Kim Coghill)

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