Steel materials in the domestic market are running short seriously. This trend is attributed to the gap between the underproduction of iron and steel and the demand for construction or civil works in connection with the planned budget consumption within 2020. It is also added that the price of iron ore has risen high internationally.

According to the statistics issued by Japan Iron and Steel Federation, the crude steel production in December 2020 was 7,526 thousand tons down 3.3% from last year with a decrease for 10 consecutive months. As for the ordinary steel materials also decreased by 1.6% amounting to 4,960 thousand tons with a decrease for 10 consecutive months. It means that there has been no recovery.
On the side of demand for iron and steel, some fields are in a mood of recovery as seen in structural steel products and galvanized steel sheets, but they are limited. From a midterm viewpoint, steel manufacturers still remain unable to move easily for any increase in production.

Due to the shortage in steel materials, the domestic price of H-section steel has risen to 78 thousand yen per ton in January 2021 (based on the average at wholesale stores in Tokyo as surveyed by Sangyo Press), although it had been changing at 73 thousand yen as an opening price until
September 2020. In fact it was 74 thousand yen in November and 75 thousand yen in December. It is pointed out that the price hike is also attributed to the internationally increasing price of iron ore. The price of iron ore was $169.63 per DMTU in January 2021 which was an increase by about $74 per DMTU comparing with $95.76 per DMTU in January 2020.

This trend is noticeable after May 2020 as follows:-
April 　2020 $84.73; (per DMTU)
May 　 $93.65;
June　　　　 $103.30
July 　　　 $108.52;
August 　　 　$121.07;
September $123.75;
October $119.78;
November $124.36;
December $155.43
January 2021 $169.63

This rapid rise of price was caused by the ultra-high level production of crude steel in China. According the breaking news of World Steel Association, China produced about 1,053 million tons of crude steel in 2020 which was an increase by 5.2% from the previous year.

In the first half of 2020 China was forced to reduce production substantially due to the corona crisis, but the blast furnaces were brought into full operation after April with the large-scale public investment to infrastructures by the government.

In marked contract on the other hand, all-round of the major steel producing countries are suffering quite a big drop as seen the respective decrease by 16.2% of Japan, 13.7% of EU, 17.7% of USA and 10.6% of India.

Naturally the demand for iron ore has reduced.
During the time, there occurred a phenomenon that the price rose up on account of China’s bomb buying of iron ore. Even if the economic situation of the other countries or areas than China in the future has been recovered and the demand for iron and steel turns to an upward trend, it might well be inevitable to buy an expensive iron ore as long as the current situation remains unchanged.

Inside Japan there has already appeared a trend of price hike not only in iron and steel, but also metals and non-ferrous metals. Affected by this trend, one of the steel fabricators which are major users for gas welders are suffering disturbance in production due to the short supply of steel materials. In the gas welding field there has appeared a shadow.

In the automobile industry, as a matter of fact, the problem of short supply of galvanized steel is getting surfaced. The short supply of semiconductor parts for onboard use has already forced car manufacturers to reduce production. Hiding in the shadow, the shortage in steel-related components is also giving a negative effect.

The automobile industry was going to recover bringing back the leadership for Japan’s economy after all. Just amid the situation, an emergency brake has been applied suddenly by the shortage of steel materials.