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The Japanese economy recovered steadily in 2005 on the strength of brisk capital investment and
firm personal consumption. The economy emerged from a soft patch in midyear as the inventory
adjustment of IT-related goods and the deceleration of export growth, both in place since the year
before, came to an end. Notably, companies finally resolved their three problems of excess debt,
excess capacity, and excess employment, and their growing profits boosted private capital
investment. Furthermore, consumer sentiment continued to recover as the employment and
income environment improved and prices of assets such as stocks rebounded. Thus, firm trends
continued, led by private demand.
As a result, in 2005 the economy posted a real growth rate of 2.7% for the sixth consecutive year
of improvement. But nominal GDP rose only 1.4%, considerably less than the growth rate of real
GDP.
In 2005, domestic demand for steel continued at a high level as in the previous year, led by
manufacturing industries such as motor vehicles, shipbuilding, and industrial machinery. But
production began trending downward at the yearend as perceptions of an inventory surplus arose
for flat-rolled products. With the supply and demand situation easing in Southeast Asian markets,
exports decreased in the second half, particularly shipments of general-purpose products.
Consequently, crude steel production in 2005 edged down 0.2% from the previous year, to 112.47
million tons, but still exceeded the 100-million-ton mark for the sixth straight year. On a calendar
year basis, this was the fourth-largest tonnage on record, following the 119.32 million tons in 1973,
117.13 million tons in 1974 and 112.72 million tons in 2004.
A year-to-year comparison of quarterly figures for 2005 shows that production hit a peak in
midyear: rising 0.6%, to 27.76 million tons, in January-March; up 2.6%, to 28.96 million tons, in
April-June; down 1.1%, to 27.83 million tons, in July-September; and down 2.9%, to 27.91 million
tons, in October-December.
A look at domestic steel demand in 2005 according to order statistics shows that demand from the
construction sector fell from the previous year, while demand from manufacturers was firm, topping
the previous year's level. Overall domestic orders received inched up 0.7%. Orders received for
ordinary steel products dropped slightly, by 0.9%, while those for special steel products increased,
rising a sharp 7.6%.
By application, orders from the construction sector for ordinary steel products for use in civil
engineering works dropped only slightly thanks to supplementary budget-related factors. Orders for
use in building construction projects and those from makers of building materials and others also
declined. As a result, orders received from the construction sector as a whole were down 1.9%.
On the other hand, steel demand from the manufacturing sector was brisk. Demand from
shipbuilders, which maintained a high level of keel laying, far exceeded the previous year's
amount, and demand continued active from such manufacturers as motor vehicle and industrial
machinery makers in reflection of strong external demand. Consequently, orders received from the
manufacturing sector as a whole rose 2.7% from the previous year.
In 2005, steel exports from Japan totaled 32.60 million tons, down 7.6% from the previous year,
the first decline in two years. By destination, exports to South Korea, the largest user of Japanese
steel products, dropped 13.6% from the previous year, to 7.74 million tons. Shipments to China
slipped 16.1%, to 5.78 million tons, while exports to Thailand rose 6.1%, to 4.10 million tons, and
those to Taiwan climbed 11.4%, to 3.61 million tons. These top four countries accounted for about
65% of Japan's total steel exports in the year.
Steel imports in 2005 totaled 8.44 million tons, a 19.7% surge from 2004, topping the previous
year's level for the third year in a row. By type of product, imports of ordinary steel products
amounted to 4.23 million tons, accounting for about half of all imports, followed by imports of
ferroalloys (1.90 million tons), pig iron (1.06 million tons), and special steel products (0.29 million
tons). In 2005, three countries supplied a combined 96% of Japan's ordinary steel product imports:
South Korea (2.37 million tons), Taiwan (0.89 million tons), and China (0.82 million tons). Imports
from China grew at a particularly notable pace, hitting a record high in 2005.
Steelmakers have increasingly concentrated their production facilities in recent years. In order to
respond to steel users' requirements for greater product diversification and sophistication, efforts
are also being made in each production process to develop higher-quality and more
environment-friendly products, while further improving productivity.
The project to develop SCOPE 21, an innovative, next-generation coke oven process featuring
environmental friendliness, energy saving, and high productivity, was successfully completed in
fiscal 2003. The construction of a new coke oven that applies the technology is scheduled to start
in fiscal 2006 at Nippon Steel's Oita Works.
Other various innovative R&D programs currently underway include those on Ultra Steel, a
structural material with twice the strength of ordinary structural steel and more than twice its
service life.
The JISF has been promoting standardization on a continuous basis by deliberating on and
preparing revision drafts and new drafts for all JIS standards and ISO standards related to the
steel industry. These standards cover a wide range of items, including everything from iron ore to
iron and steel products (flat-rolled products, coated sheets, shapes, bars, wire rods, tubular
products, etc.) to mechanical tests, chemical analysis, nondestructive tests, and other evaluation
methods. In terms of number, there are about 270 JIS standards and about 430 ISO standards.
Representing the Japanese Industrial Standards Committee (JISC), the JISF is currently acting as
the secretariats of five ISO committees, including those on ISO/TC17 (Steel) and TC102 (Iron Ore
and Direct Reduced Iron). Thus, the JISF is rendering firm support to ISO's activities, one
important way in which it makes an international contribution.
The JISF produces and sells about 340 specimens of Japanese Iron and Steel Certified Reference
Materials. Well-known as JSS materials both in Japan and abroad, these are widely used not only
in the steel industry but also by administrative, educational, and research institutions in Japan and
overseas as benchmark materials for iron and steel production or reference materials in scientific
studies.
