According to report of Japanese Ministry of Economy, Trade and Industry (METI), Japanese demand for crude steel is predicted to decline to 26 million tons in next Q1, down by 2% year on year, touching the two-year low.

It’s analyzed that the appreciated Japanese Yen and Thailand’s floods impacted Japanese steel industry severely. Nippon Steel and JFE Steel, two major steelmakers in Japan have been forced to reduce production, casing the country’s steel demand drop.

Though the Japanese domestic demand for steel has been recovering gradually after the devastating earthquake and tsunami in this March, the country’s increased demand from automobile sectors can’t offset the decreased exports.

It’s predicted that the steel demand from Japanese construction industry would increase by 1.4% year on year to reach 4.65 million tons in next Q1 and that from automobile sectors would surged by 55% to 3.27 million tons.

Meanwhile, METI also estimated that Japan’s steel exports to Thailand would recover to 7.62 million tons in next Q1; however, the figure will decrease by 15.3% year on year.

For 2012, METI forecasted that Japanese exporters would face difficulty due to some uncertainties such as currency rate and debt crisis in euro zone.