The Japanese economy grew for a fifth consecutive quarter at the start of 2017, the longest stretch of growth in more than a decade. Japanese gross domestic product increased by 2.2 percent in annualized terms in the three months through March, according to the statistics released by the Japanese Cabinet Office.
According to sources, there are concerns about this trend’s sustainability. A source close to SteelOrbis has noted that Toyota, for example, has decreased daily production to approximately 12,500 vehicles from the 13,000-13,500 estimated production through the first quarter of 2017. A production level of 12,000-12,500 units per day is expected through the end of third quarter 2017.
A notable change in buying strategies presently under discussion in the Japanese steel industry involves the possible use of indexing coking coal contracts to minimize buying price risks and reduce the usual extensive negotiations.
Japanese firms are presently under negotiations for second quarter coking coal contracts that have been slow to close due to the recent price volatility from Cyclone Debbie in Australia. Some large Japanese mills are considering index usage for their quarterly coking coal contract volumes. Buyers also see the benefit in moving to index pricing as improving efficiencies in negotiations.
According to sources close to SteelOrbis, it is unknown whether the strategy will be adopted by all mills and whether it is only a short-term approach or a long-term standard, but it is under serious consideration by Japanese mills at the moment.