TOKYO Japans steelmakers are less pessimistic about their business environment for the second quarter than they were at the start of the year, according to a Bank of Japan survey.
The Japanese business sentiment index came in at negative 13 for the second quarter compared with negative 30 at the start of the first quarter.
"There are still worries," an executive at one steelmaker said. "We are concerned about too much steel capacity in Asia and a lot of domestic demand is being moved overseas by manufacturers such as automakers. Also, some sectors, especially the shipbuilding industry, face very poor business conditions."
First-quarter business conditions were worse than the survey had predicted, with the actual reading coming in at negative 38, well below the forecast of negative 30.
"The improvement in demand has taken longer than we had expected," one industry executive said. Nevertheless, demand from many sectors now appears to be picking up, he added. But the fact that the reading among steelmakers remains firmly in negative territory shows that demand, while picking up, continues to remain sluggish.
Smaller steelmakers were more pessimistic about their market than larger steelmakers, the survey showed, but shipbuilders have overtaken steelmakers as the most pessimistic in the manufacturing sector. "They are getting almost no new orders, and that impacts steel demand," another executive said.
But apart from shipbuilders, many big manufacturers said their sentiment has improved for the first time in three quarters on the weaker yen and rising share prices.
A version of this article was first published by AMM sister publication Steel First.