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Japan Steel Export Demand Stalls, Group Chairman Says

July 20 (Bloomberg) -- Demand for steel exports from Japan has stalled as Chinese customers “temporarily” refrain from buying the alloy used in cars, an industry group chief said.

“I’m not optimistic about the outlook of the Asian market,” Japan Iron and Steel Federation Chairman Eiji Hayashida told reporters today in Tokyo. “We will need to carefully watch out for another month or two whether demand will restore growth or continue stalling.”

A prolonged slump in the export market would cut sales for Japanese steelmakers including Nippon Steel Corp. and JFE Holdings Inc., which have been increasingly reliant on overseas customers as the domestic market stagnates. Steel prices in China, the world’s largest consumer, are likely to drop 10 percent this half because of high inventories and slowing demand, JPMorgan Chase & Co. said in a July 12 report.

Exports last fiscal year accounted for a record 46 percent of steel shipments for JFE, Japan’s second-largest steelmaker, while Nippon Steel exported 38 percent of its shipments. Japanese mills produced 9.35 million metric tons of crude steel in June, down 3.8 percent from the previous month, the federation said today on its website. That’s 36 percent higher than the same month a year earlier.

China’s passenger-car sales to dealerships rose at the slowest pace in 15 months in June as inflation reduced consumers’ purchasing power and economic growth showed signs of cooling. Sales of cars, sport-utility vehicles and multi-purpose vehicles in the world’s largest auto market rose 19 percent from a year earlier to 1.04 million last month, the China Association of Automobile Manufacturers said June 9.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs in Sydney at ahobbs4@bloomberg.net.

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