TOKYO (Reuters) - Japanese steelmakers are not considering cutting output as demand from shipbuilders and construction machinery makers is solid, the head of an industry body said on Friday, but he added that recent financial turmoil was a concern.
Amid signs of softening prices on the global market, ArcelorMittal ISPA.AS(MT.N) said this week it was preparing to reduce output by up to 15 percent, easing concerns that falling prices in China may affect the rest of the world market. [nLH359717]
Shoji Muneoka, chairman of the Japan Iron and Steel Federation, said steelmakers expect domestic car production to stay level with last year’s 11.8 million units, while demand from shipbuilders and construction machinery makers remains tight.
“Conditions vary from sector to sector, but demand is tight in general for the time being,” Muneoka, president of Nippon Steel Corp (5401.T), the world’s second-biggest steelmaker, told a news conference.
Shares in Nippon Steel and other Japanese steel makers jumped on Friday, also helped by world No. 4 POSCO’s (005490.KS) comment that it expected steel prices to hold up.
Muneoka added: “It’s unlikely that consumer spending and companies’ investment plans will not be affected by such turmoil in the global financial markets and a plunge in stock prices. We’ll keep a close watch on developments.”
A source at a Japanese steelmaker told Reuters last month that price hikes were the company’s top priority and that it would immediately cut output to keep market conditions tight if demand weakened.
Muneoka declined to comment on Brazilian miner Vale’s VALE5.SA demand for an additional price hike on its iron ore.
Shares in Nippon Steel finished up 10.8 percent at 442 yen, while JFE Holdings (5411.T) closed up 6.9 percent and Sumitomo Metal Industries 5405.T gained 6.3 percent. The iron and steel subsector index .ISTEL.T was up 7.3 percent.
Reporting by Yuko Inoue; Editing by Hugh Lawson