Japan's crude steel output to rise at fastest pace in 40 yrs: gov't+

TOKYO, June 29 Kyodo -
Japan's crude steel output in the three months through September is expected to
rise 14.3 percent from the previous quarter in the sharpest hike in nearly 40
years, the government said Monday, adding to signs that the worst of the
economic recession may be over.
Crude steel output in the second quarter of fiscal 2009 is projected at 21.77
million tons amid hope that carmakers will boost production. But the amount
also represents a 28.5 percent fall from a year earlier, the Ministry of
Economy, Trade and Industry said.
Analysts say adjustment in the production of raw materials is often slower than
that of consumer goods, and thus any boost in the output of such materials
suggests the chance of upturn in the economy as a whole may not be so small.
The rate of quarter-on-quarter increase would be the sharpest since 1970, when
the Japanese economy was growing rapidly, it said, adding, ''It is obvious that
recent falls in steel production have hit the bottom.''
The forecast comes as carmakers have made considerable progress in inventory
cuts and are boosting output against the backdrop of recovery in sales,
especially of gas-electric hybrid vehicles.
Auto manufacturers earlier reduced inventories amid the global economic
downturn that entailed sharply falling sales.
The brisk forecast is also supported by a recent increase in the number of
public works projects as well as a potential recovery in Japan's steel and iron
exports mainly to other Asian countries, the ministry said.
By industry, automakers' demand for ordinary steel in the July-September period
is projected to rise 17.7 percent from the current quarter but to slide 25.6
percent from a year earlier.
The ministry also forecasts domestic car production will expand some 20 percent
in the next quarter from the April-June period.
Earlier in the day, the ministry said the country's industrial output in May
rose a seasonally adjusted 5.9 percent from April, the fastest pace of increase
in nearly 60 years, due mainly to robust performances in the auto industry.
''Recovery in commodity industries has been continuing,'' said Ryutaro Kono,
chief economist at BNP Paribas Securities (Japan) Ltd. ''It seems that
steelmakers, which got a slow start, are finally making progress in inventory
adjustment, helped by a rebound in production by carmakers and other
manufacturers.''
Also Monday, an industry body said Japan's domestic motor vehicle production in
May plunged 41.4 percent from a year earlier to 542,282 units. However, the
rate of decline shrank for the third consecutive month, according to the Japan
Automobile Manufacturers Association.
Shoji Muneoka, chairman of the Japan Iron and Steel Federation, an industry
body, said he believes demand for steel is recovering after ''hitting the
bottom.''
Muneoka, president of Nippon Steel Corp., the nation's largest steelmaker, also
told a press conference that the company will raise its production level to 60
to 70 percent of its capacity during the next three months from the current
level of around 55 percent.
==Kyodo
2009-06-29 21:31:34