US tariff to curb Japan’s crude steel output in FY25

Market: Metals
13/05/25

Japan's major steel producers will likely cut their crude steel output in the current fiscal year ending in March 2026, partly because the US' blanket 25pc tariff on automobile imports will curb domestic car productions.

The country's largest and second-largest steel mill by capacity Nippon Steel and JFE Steel estimates crude steel output at 33mn t and 21mn t respectively in April 2025-March 2026, both down on the year by around 1mn t.

This comes as the US' tariffs on automobile imports is likely to cap domestic car production, according to the firms.

The US levy could potentially reduce several hundred thousand tonnes of its steel products sales given that 20pc of the Japanese domestic car production is exported to the US, said JFE.

Nippon Steel also forecasts lower steel demand because of a possible fall in auto and machinery exports to the US, although it is difficult for the company to evaluate the quantitative impact on the wider supply chain. Nippon Steel estimates Japan's total car exports to the US, including delivery via Canada and Mexico, is currently around 2.8mn units/yr, all of which could be subject to the US tariffs.

Nippon Steel is cautious about providing its output projections given the unstable climate over the ongoing trade negotiations between Tokyo and Washington.

Forecasting crude steel output for the current fiscal year is difficult given uncertainty over the possible impact of US tariff measures, Nippon Steel told Argus. JFE also said "further risk analysis is necessary", suggesting a possible revision of its production outlook.

Meanwhile, Nippon Steel expects no significant impact from the US tariffs on its direct steel products delivered to the country for the time being. The impact of the tariffs will be limited given the firm's value-added products such as high-alloy seamless pipe are exported in small volumes and difficult to replace with other products, the company said. Some of its US clients designate Nippon Steel as the supplier of these products because US local manufactures are unable to produce them, the company added. Nippon Steel did not provide their export volumes.

Domestic steel demand

Domestic steel demand is also unlikely to recover in the short term regardless of the US tariff.

The country's domestic crude steel output has been consistently falling over the past several years, but the recent downtrend appears to be especially worrying for the Japanese steel producers.

The current slump in domestic steel demand is more severe than expected, Nippon Steel said, forecasting the continuous downtrend in steel demand for most of the steel consuming sectors including auto, construction and manufacturing industries.

Sluggish demand has even led JFE to decide to completely close one of its steel production facilities.

JFE announced on 8 May that it will shut down its No. 4 basic oxygen furnace (BOF) steel plant in western Japan's Fukuyama sometime in April 2027-March 2028, as part of the mid-term strategy. This will reduce the company's domestic steel production capacity to 21mn t/yr, down by 500t from the 2024-25 level, the company added.

JFE decided to close the BOF plant because domestic steel demand is likely to continue falling on the back of shrinking populations and labour shortages, according to the firm. These are causing delays in construction projects and therefore weighing on steel demand, the firm added.

By Yusuke Maekawa

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

20/06/25

Eur Cu scrap prices rise on cathode supply squeeze

London, 20 June (Argus) — Millberry copper scrap is trading at the same level in Europe as the London Metal Exchange (LME) copper cash price, as buyers turn to high-grade scrap to replace the limited availability of cathodes that were pre-emptively shipped to the US to avoid potential tariffs under US president Donald Trump. The Argus weekly assessment for Millberry (bare bright) rose to 99.5-100pc of the LME cash price on 17 June, from 98-99.5pc on 9 June. Europe #1 (Berry/Candy) was last assessed at 97.75-98.75pc of the LME cash price and Europe #2 (Birch/Cliff) was at 91-93pc. Millberry is a suitable substitute for copper cathode owing to its high copper content of around 99.95pc, while even Berry/Candy with slightly lower copper content, is also a viable alternative. Birch/Cliff scrap, a more mixed grade, requires more processing and yields lower copper output, but is still being evaluated by some buyers because of limited cathode availability. The price convergence is being driven by copper cathode shortages in Europe after exporters began shifting large volumes of the metal into the US earlier in the year owing to concerns that Trump will impose heavy import duties on the metal. Trump officially ordered a section 232 investigation on 25 February into whether copper imports threaten US national security, encompassing all forms of copper, including raw mined copper, copper concentrate, refined copper, copper alloys, scrap and derivative products. Section 232 is the same basis on which the US applied 25pc tariffs on steel and aluminium imports, which it raised to 50pc at the start of the month. Fears that copper could face similar measures spurred exporters to ship material to the US, rapidly draining European and Asian LME warehouses of cathodes. The shift in market behaviour caused LME on-warrant copper stocks to plummet by over 78pc from the start of the year to 54,400t today. Copper prices on the US Comex exchange have surged on the drive to shift metal into US warehouses, pushing the arbitrage between LME and Comex benchmarks to record highs. The arbitrage between Comex spot-month copper and LME cash prices was $868.95/t in favour of Comex on 18 June, down from a peak of $1,862.13/t on 26 March but still easily strong enough to make sellers of Comex-deliverable cathode likely to choose the US option. "Cathode premiums are going up in Europe mainly because of the arbitrage rather than demand, which is not particularly strong," a trader told Argus , referencing that premiums in Europe are at record highs because of critical supply shortages for immediate delivery. The Argus assessment of the delivered Germany copper cathode premium to the LME cash price rose to $270-290/t on 17 June, up by 56pc since mid-March. Offers for cathode were heard at premiums as high as $300/t delivered Germany this week, demonstrating that the shortage is likely to continue to push premiums higher. Sources expect cathode premiums to remain elevated until the Section 232 investigation is officially concluded in late November 2025, which means demand for high-grade scrap will be sustained in the near term. "Because of the lack of cathodes, I have people I haven't heard from in five years come to me asking for scrap," a trader noted, referencing that the current tightness in the cathode market is supporting a higher demand for high-grade copper scrap. Several market participants said they would not be surprised if copper scrap temporarily begins trading at a premium to the LME price in Europe given the scarcity of cathodes. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Recent deep-sea and short-sea cfr Turkey scrap deals

19/06/25

News

19/06/25

Recent deep-sea and short-sea cfr Turkey scrap deals

London, 19 June (Argus) — A summary of the most recent deep-sea and short-sea cfr Turkey ferrous scrap deals seen by Argus. Ferrous scrap deep-sea trades (average composition price, cfr Turkey) Date Volume, t Price, $ Shipment Buyer Seller Composition Index relevant 18-Jun 35,000 339.50 (80:20) July Marmara Baltics/Scan HMS 1/2 80:20, bonus N 17-Jun 27,000 340 (80:20) July Izmir Baltics/Scan HMS 1/2 80:20, shred, bonus Y 13-Jun 25,000 339 (80:20) July Samsun Baltics/Scan HMS 1/2 80:20 Y 11-Jun 40,000 336.50 (80:20) July Marmara Russia HMS 1/2 80:20, shred, bonus Y 2-Jun 35,000 336.50 (80:20) July Izmir UK HMS 1/2 80:20, shred, bonus N 2-Jun 25,000 332 (75:25) July Izmir Cont. Europe HMS 1/2 75:25 N 2-Jun 40,000 340.50 (80:20) July Marmara Baltics/Scan HMS 1/2 80:20, shred, bonus Y Ferrous scrap short-sea trades (average composition price, cif Marmara) Date Volume, t Price, $ Shipment Buyer Seller Composition Index relevant 20-May 3,000 328 (80:20) May Marmara Cont. Europe HMS 1/2 80:20 Y Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

ArcelorMittal halts DRI-EAF projects in the EU

19/06/25

News

19/06/25

ArcelorMittal halts DRI-EAF projects in the EU

London, 19 June (Argus) — Luxembourg-based steelmaker ArcelorMittal said it will not proceed with previously announced direct-reduced iron (DRI) and electric arc furnace (EAF) decarbonisation projects at Bremen and Eisenhuttenstadt in Germany, citing the unfavourable policy and market environment. The company initially planned to supply DRI from Bremen to the EAF in Eisenhuttenstadt after their construction. But in November last year, the company said it was unable to take final investment decisions on building the DRI-EAF assets in the EU because of challenging energy, policy and market environments that were not moving in a favourable direction. ArcelorMittal this week announced that it will carry out repair works on blast furnace 5A at its Eisenhuttenstadt site next week until 28 June, similar to the repairs last year. The blast furnace has capacity of 2.5mn t/yr. The company has urged the EU to accelerate enforcement of the carbon border adjustment mechanism (CBAM), strengthen trade protections and implement the EU Metals Action Plan to restore the competitiveness of low-emissions steel. In May, ArcelorMittal confirmed its intention to invest €1.2bn in a new EAF at its Dunkirk site in France. Market participants suggest the company was delaying its DRI investments in Ghent, Belgium, and Dunkirk, but the steelmaker has yet to comment. The French government in 2023 approved an €850mn grant to ArcelorMittal to decarbonise its Dunkirk asset. By Elif Eyuboglu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Nationalisation may prop up surplus steel: Worldsteel

19/06/25

News

19/06/25

Nationalisation may prop up surplus steel: Worldsteel

New York, 19 June (Argus) — Redundant steelmaking capacity is unlikely to be reduced by decarbonisation and market forces, given global fragmentation and the focus on resilient supply chains, Edwin Basson, director general of international industry organisation Worldsteel, told Argus this week. "If you asked me five years ago, I would have said I suspect decarbonisation and market forces would have led to reductions in redundant capacities, but the few recent examples we've seen of nationalisation or re-nationalisation, quasi-nationalisation, will most likely see countries try to retain steelmaking capacity," Basson said on the sidelines of the Global Steel Dynamics Forum in New York. There are several instances of governments becoming involved in the operation of troubled mills in Europe and the UK. Basson said the industry's future direction depends on three main forces — environmental, employment and economic efficiency. In previous decades, economic efficiency was the main driver, allowing inefficient capacity to close or be modified. But the zeitgeist of reshoring, re-regionalisation and focus on employment has challenged this force, also contributing to the continued operation of surplus capacity that is not necessarily required by the market. "The strength of this efficiency force has reduced the labour and the environmental force is receiving more prominence at the moment. The moment you put a national interest filter on top of all of this, then the efficiency force becomes of minimal importance," he said. And there is limited room to consolidate producers in developed markets, such as the US and EU, given competition concerns, which also dampens cross-border consolidation to some extent. There is scope for consolidation in China, which is still behind the targets set by the government in the previous five-year plan — of 60pc of capacity being consolidated — and in smaller developing economies, shrinking the long tail of smaller producers. Worldsteel forecasts that half of all steel will still be made in blast furnaces in about 20 years from now, despite the current focus on decarbonisation. There is insufficient scrap in the world for the whole industry to move away from blast furnaces and insufficient high-quality direct-reduced iron feed, Basson said. In the EU, where decarbonisation is perhaps the most pressing issue as mills face mounting carbon taxes, the energy challenge is of particular significance. "There is a reason that Scandinavia is, at least in the EU, the home of very progressive decarbonisation producers," he said. "They have access to high-quality materials, direct-reduced iron and so forth, and access to high-quality sustainable energy that is not carbon-based. It's a very different story in other parts of northern Europe, where energy is a key question, and a different question again in the south, where it's energy and access to raw materials." "There will be multiple pathways to decarbonise, depending on location, and Europe may soften its policies to enable existing production routes to remain a force for a number of years longer," he said. Exponential breakthrough technologies related to the blast furnace could see emissions fall to a similar level as the gas-fed direct-reduced iron/electric arc furnace of 1.3-1.4t of carbon per tonne of steel. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

India's new steel input quality rule to curb imports

19/06/25

News

19/06/25

India's new steel input quality rule to curb imports

Mumbai, 19 June (Argus) — India's ministry of steel has issued an order stating raw materials used in imported finished steel products should meet Indian quality standards. This is likely to restrict imports, resulting in shortages of specialty steel products used by the automotive industry and other consumers, industry participants said. The order, issued on 13 June, will now require semi-finished products such as slab, billets and ingots to comply with Indian standards, even if the finished steel product already has a Bureau of Indian Standard (BIS) certification. If an overseas supplier has a BIS permit for IS 2062 grade hot-rolled coil, it will also need a similar certification for IS 14650-grade slab. For downstream products such as hot-dip galvanised steel, the input materials would constitute hot-rolled and cold-rolled sheets and strips, which would also need BIS certification, along with semi-finished products. Earlier exporters only needed BIS compliance for the final steel product and not the input material. The original quality control order covered 151 steel products. Steel consumers concerned A provisional 12pc safeguard duty implemented from 21 April has slowed imports of certain flat steel products. The new quality control rule, referred to by some industry participants as an additional "barrier" for imports, is applicable to imports with a bill of lading on or after 16 June. It has stoked concerns among micro, small and medium enterprises (MSMEs) that consume overseas steel not made in India, market participants said. The order "has triggered fears of massive losses and plant closures among MSMEs that rely on imported semi-finished steel," according to a report by think-tank the Global Trade Research Initiative (GTRI). "Many have already paid for shipments now deemed non-compliant," the report said. The automotive industry is likely to face production hurdles. Japan has been supplying a lot of specialty steel, which is not manufactured in India, to the Indian automotive industry, sources said. An automotive end-user said they were in talks with the government and declined to comment on the new order. "Steel users across India are shocked," an international steel trader said. In certain cases such as cold-rolled non-oriented steel, a type of electrical steel used in motors, the raw materials such as cold-rolled full hard steel (CRFH) or hot-rolled coil (HRC) may have BIS licence but inputs used to make CRFH or HRC may not meet Indian standards, the trader added. There is already a shortfall of certain speciality steel grades in India. Only about 12pc of the required 400,000t of cold-rolled grain-oriented steel (CRGO) was produced domestically in April 2023-March 2024, according to GTRI. The remaining volumes were imported from overseas suppliers such as China, Japan, Russia, and South Korea. India launched a new production-linked incentive scheme for speciality steel products this year, with less criteria for investment than the previous version. The new steel input quality rule is clearly in line with the government's "Make in India" initiative, a Mumbai-based trader said. It will now be difficult to get imports purchased in recent weeks by steel consumers, another Mumbai-based trading company said, adding that market conditions are tilting in favor of domestic producers. The new order is also expected to weigh on imports of plate from South Korean producers which do not have a BIS for certain input materials, the trader said. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more