Forecast Shows Japan’s Steel Output Collapsing 26% This Quarter

(Bloomberg) -- Steel output in Japan is on course to collapse 26% this quarter as the coronavirus pandemic pummels the global economy, according to an official forecast, adding to evidence of the severe pain being felt across the worldwide industry with mills being forced to scale back operations.

The nation’s crude-steel production is projected to slump to 19.36 million tons in the period, the lowest since the same quarter of 2009, the Ministry of the Economy, Trade and Industry said in a statement on Thursday. Japan is the third-largest supplier of the alloy after China and India.

The steel industry has been upended by the outbreak, with governments imposing lockdowns to try to prevent the spread of the disease. Earlier this week, data from the American Iron and Steel Institute showed U.S. steelmakers are using less of their plant capacity than at any time since shortly before Donald Trump became president. Japan’s METI noted that its estimate only partially factored in the impact of the virus.

The collapse in the steel production may contribute to weaker iron ore prices as demand for the raw material input sags. Still, so far this year iron ore futures have lost less ground than other industrial comodities, dropping only about 10% in Singapore.

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