Japan’s crude steel output is forecast to rise 1.7% year-on-year in the first three months of 2024 because of healthy demand from automakers, the Ministry of Economy, Trade and Industry (METI) said on Tuesday.

That would put the world’s third-largest steel producer’s annual output for the financial year to March 31 at 88.10 million metric tons, up 0.3% from a year earlier.

“Steel output will increase as solid demand from automakers is anticipated to offset sluggish demand from other manufacturers and the construction sector,” Daisuke Matsuno, director of the METI’s metal industries division, told a news conference.

“But there are concerns that the weakening European economy and stalled economic recovery in China could weigh on steel demand in industrial machinery.” 

The ministry estimated crude steel output to be 21.98 million tons for the January to March period, up from 21.62 million tons a year earlier, though it would log a 1.7% drop from the current quarter.

Demand for steel products including for exports is forecast to fall 0.5% to 19.92 million tons in the first quarter, the ministry said, citing an industry survey.

Exports are forecast to increase 1.4%.

“Exports of specialty steel products will likely pick up, but those of ordinary steel products are expected to decrease amid strong exports from China where the supply-demand balance is deteriorating,” Matsuno said.

Nippon Steel’s Executive Vice President Takashi Hirose also expressed concern about China’s growing steel output and exports.

“China’s steel output remains high and we should expect this to continue,” he said in a separate news conference, adding that Japan needs to monitor its steel imports closely because the October figure was the highest since around March 2014.

Japan’s October imports of ordinary steel products rose 20.8%, marking an 11th consecutive monthly increase, according to the Japan Iron and Steel Federation.