According to Japanese government data released recently, Japan's stainless steel output in January to June 2007 rose by 15.4%YoY to 1,854,749 million tonnes. Japanese industry sources, however, cautioned that the 15.4%YoY production increase may be number magic which could mislead the stainless industry outlook for the second half of this year.

The breakdown of the January to June 2007 stainless steel production by stainless type is
1. Chrome stainless - 679,811 tonnes
2. Chrome molybdenum stainless - 104,883 tonnes
3. Chrome manganese stainless - 63,087 tonnes
4. Chrome nickel stainless - 834,665 tonnes
5. Chrome nickel molybdenum stainless - 172,303 tonnes.

Japanese stainless steel producer, nickel trader and nickel producer sources agreed that the stainless output by Japanese mills has been strong in the first three months of this year. The steady demand came from active commercial building constructions as well as rising demand in machineries accompanying the expansion of the Japanese economy, Demand was domestic market driven and not from exports that have slowed down. Stainless steel exports fell by 5.4%YoY to 662,340 million tonnes in January to June 2007.

The nickel industry source pointed out that the 15.4% increment was a result of comparing the January to June 2007 figures with a period of low growth. In the first half of 2006 Japanese stainless steel mills were just recovering from output cuts in 2005. If you compare the January to June 2007 figures with that of the previous semester July to December 2006 you won't see a major rise.

Sources agreed that stainless steel production after July is likely to fall below 300,000 million tonnes per month due to output cuts implemented by several Japanese stainless steel mills.