TOKYO The yen remains too overvalued for Japanese steelmakers to compete effectively with regional suppliers, despite the Japanese currencys recent decline in value, industry officials say.
We have seen the yen drop in value in recent weeks, and of course that is welcome for us. But I would say that we will need to see it drop to around the ¥90 level against the U.S. dollar before we can seriously compete on the export market, especially for standard grades, a senior official at one of Japans leading stainless steel producers told AMM sister publication Steel First.
Japanese stainless steel producers have effectively been cut out of the export market for all but the most specialized grades, which cheaper producers in China and South Korea cannot produce, he noted.
The situation is equally tough for carbon steel producers.
The current level is still uncomfortably strong. We are hoping that a new government will lead to further declines in the value of the yen, an executive at a major mill said.
Japan is set to hold general elections later this month, with Shinzo Abethe head of the opposition Liberal Democratic Party, which is expected to winopenly calling for a weaker yen to support the countrys exporters.
The official added that the stiff competition Japanese mills face in regional markets is being made worse by weak global demand and excess capacity in the region.
Since hitting a low of ¥76.39 to the dollar in February, the Japanese currency has lost almost 8 percent of its value, although it is still off its year-to-date peak of ¥83.12 to the dollar, reached in mid-March.
The yen stood at ¥82.40 to the dollar on Wednesday, Dec. 12.
Perhaps one small consolation for Japanese producers is that their South Korean counterparts have seen their currency steadily gain against the dollar. It has risen by about 9 percent since early June and now stands at just off its strongest level in 15 months.
But despite complaints about the strength of the yen, Japanese steel exports have surged, rising almost 20 percent month over month and almost 35 percent year over year in October. For the first seven months of the fiscal year, volumes rose more than 9 percent.
A version of this article was first published by AMM sister publication Steel First.