Japanese steel exports fell by -1% year-on-year to 3.82 million tonnes in March. They were still down however by -5.5% over the financial year to March at 5.4mt, according to final data from the Japan Iron and Steel Federation (Jisf). Volumes are likely to continue to struggle as the Japanese yen jumped 2% on Thursday, Kallanish notes.

A 6.5% y-o-y gain in special steel exports to almost 809,000t helped to only partly counteract a -2.4% fall in ordinary steel exports to 2.51mt. Key destination Korea saw a 3.3% growth in exports to almost 622,000t while exports to Thailand recovered sharply by 19.6% y-o-y to 520,000t. Exports to China have also recovered significantly, jumping 27.8% month-on-month and 0.9% y-o-y to almost 513,000t.

Jisf has said that a small recovery in domestic steel demand is likely to be offset by falling export volumes over the coming 12 months. Considering the direction of the Japanese yen, exports are indeed likely to struggle. After the Bank of Japan held back from announcing further quantitative easing this week, the yen gained around 2% against the dollar on Thursday to just over 108 JPY/USD.

Exports had mixed success in 2015 despite the much weaker yen, with a large increase in volumes to India but little success competing against Chinese steel elsewhere. For the rest of 2016, Japanese exports will have to cope with a stronger currency, increasing Indian protectionism and reduced opportunities to sell silicon steel to the USA and semis to Korea and Taiwan. On the other hand, a recovery in Thai manufacturing could be a positive.