Japan’s dry matter imports fall 4%, says BIMCO

Japan's dry matter imports fall 4%, says BIMCO
Share it now

“After narrowly avoiding a recession in the fourth quarter of 2022, the Japanese economy appears to be recovering. However, Japan’s steel demand remains weak and as a result, the country’s bulk imports are estimated to have fallen by 4% yoy in the first quarter of 2023,” says Filipe Gouveia, Shipping Analyst at BIMCO.

The steel industry in Japan relies on iron ore and coking coal imports, which together account for 41% of the country’s bulk imports. Due to lower steel production in Japan, imports of iron ore and coking coal fell 6% and 9% year-on-year, respectively, in the first quarter.

Activity in the country’s construction and manufacturing sectors fell during the quarter, leading to a fall in domestic demand for steel. Japanese steel exports also fell amid weak global demand.

However, thermal coal remains Japan’s largest imported commodity, accounting for 35% of import volume, and combined the top three commodities account for 86% of bulk imports. Thermal coal imports held steady in the first quarter, falling just 1% year-on-year. Thermal coal is primarily used to generate electricity and is less sensitive to fluctuations in industrial production.

“Japan is the world’s second and third largest importer of sea coal and iron ore, respectively. Although less market-determining than China, the increased demand from the Japanese steel sector could still be the key to a further recovery in freight rates in the coming quarters,” says Gouveia.
This is especially true for the Capesize and Panamax segments, as 7% and 12% of their volume goes to Japan, respectively. This makes Japan the second largest destination for these types of ships.

For Japanese bulk imports to recover, global economic conditions need to improve. A recovery in global economic activity would support a recovery in Japanese steel exports as well as a recovery in Japan’s manufacturing sector. Japan exports a third of its steel production, while about a quarter is used in manufacturing.

“China’s economic recovery could be a catalyst for economic growth in the region. As Japan’s largest trading partner, an economic revival in China should boost demand for Japanese-made products. In addition, an increase in steel exports from Japan to other Asian economies could soon follow,” says Gouveia.

Source: News Network

Share it now
%d bloggers like this: