The steel industry in Japan relies on iron ore and coking coal imports, which combined account for 41% of the country’s bulk imports. Due to lower steel production in Japan, iron ore and coking coal imports fell respectively 6% and 9% y/y in the first quarter.
Activity in the construction and manufacturing sectors in the country declined during the quarter, causing a fall in domestic demand for steel. Japanese steel exports also declined amid weak global demand.
Accounting for 35% of import volumes, thermal coal, however, remains Japan’s largest import commodity, and combined the top three commodities make up 86% of bulk imports. Import of thermal coal remained stable in the first quarter, falling only 1% y/y. Thermal coal is mainly used for electricity production and is less sensitive to fluctuations in industrial production.
Japan is the world’s second and third largest importer of respectively seaborne coal and iron ore. While less market defining than China, increased demand from the Japanese steel sector could still be key to further freight rate recovery in the coming quarters.
This is particularly true for the capesize and panamax segments as respectively 7% and 12% of their volumes are headed to Japan. This makes Japan the second largest destination for these ship types.
For Japanese bulk imports to recover, global economic conditions must improve. A pick-up in global economic activity would support a rebound in Japanese steel exports as well as a recovery in the Japanese 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 pick-up in China is likely to boost demand for Japanese manufactured products. In addition, an increase in steel exports from Japan to other Asian economies could soon follow.
All of BIMCO's most widely used contracts and clauses as well as advice on managing charters and business partners.
For general guidance and information on cargo-related queries.
Want to buy or download a BIMCO publication? Use the link to get access to the ballast water management guide, the ship master’s security manual and many other publications.