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Japan steelmakers pin hopes on stimulus

Keywords: Tags  steel, Shinzo Abe, Japanese steel consumption, steel exports, stimulus package, infrastructure

TOKYO — Japan’s steelmakers hope that a burst of stimulus measures from the country’s new government will help revive stagnant domestic steel demand and make exporting easier.

Prime Minister Shinzo Abe’s cabinet has endorsed a 20.2-trillion-yen ($226-billion) stimulus package in an attempt to perk up Japan’s lethargic economy and tackle the strong yen.

Abe wants to boost growth by encouraging private investment, improving Japanese companies’ global competitiveness and pumping money into the country’s decades-old infrastructure. The package also includes spending on reconstruction projects in Japan’s northeast, which was devastated by an earthquake and tsunami in March 2011.

Japanese steel consumption, which in November fell to its lowest level in six months, could benefit from the shift in policy.

"Any measures by the government to stimulate domestic demand are good, and we welcome the package," an executive at one steel producer said.

The package also is a declaration of intent that the new government will tackle the strong yen, which makes it difficult for Japanese companies to compete globally. The yen on Monday hit its lowest level against the dollar in two and a half years and its lowest level against the euro since early 2011.

"We still think it’s a bit high and we would like to see it weaken more, but the decline has been a big relief because we were really suffering badly from the high yen," the executive said.

A version of this article was first published by AMM sister publication Steel First.

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