The tougher construction regulations introduced by the Japanese government at the end of June have started to show their negative influence on both consumption and production of steel in the country.
According to several sources, since the introduction of the new construction regulations, demand for steel in Japan has dropped by two million metric tons, as several construction companies decreased their steel consumption while some even freezed their construction projects.
Moreover, in the near future market players expect to see a further decline in orders for wide flange steel by 19.6 percent and in rebar orders by 14.7 percent.
The weakening of domestic steel demand has also affected the steel producers, who might even roll back their production capacities given the current weak state of the export markets (especially the Southeast Asian market).
A possible rollback of production capacities may also be hinted at by the continuous decrease of scrap purchases and prices in the Japanese domestic market. The latter are decreasing on a daily basis.