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Industrial materials demand rebounding

Kyodo

Demand for industrial materials is showing clear signs of recovery, with steel and cement production in 2013 in Japan hitting their highest levels in five years on the back of the building boom in disaster-struck regions and urban areas undergoing economic expansion.

Production of paper and ethylene, used for a wide range of chemical products, has also increased for the first time in three years.

The Japan Iron and Steel Federation said Thursday that the 2013 domestic production of crude steel grew 3.1 percent from the previous year to 110.57 million tons, the highest since 2008, when it was at 118.70 million tons before the impact of the global financial crisis kicked in.

Since last summer, steel makers raised output for cars and homes, two major big-ticket items consumers were rushing to buy ahead of the consumption tax hike in April, the association said. A weak yen also helped make Japanese steel more competitive overseas, it said.

Cement production grew 4.1 percent to 61.69 million tons in 2013, registering the second straight year of growth and also the highest level since the 67.60 million tons marked in 2008.

Like steel, cement demand was underpinned by the construction boom in the country’s northeastern region, which was severely affected by the 2011 quake and tsunami, and a building boom chiefly in the Tokyo metropolitan area.

Paper makers took relief from a slowdown in imports as a result of the strong dollar that made overseas products less competitive in Japan. They benefitted from expanded demand for catalogs and leaflets as business expansion continued.

Paper production grew 1.1 percent to 26.25 million tons in 2013.

Ethylene output expanded 8.9 percent to 6.69 million tons in 2013. Although it was far lower than the record 7.74 million tons in 2007, the rise signaled hopes that manufacturers may come out of the doldrums that they were in as a result of strong competition from overseas producers when the dollar was weak.

Yoshimitsu Kobayashi, chairman of the Japan Petrochemical Industry Association, was bullish about the prospects for 2014 at a press conference on Monday. “We are concerned about a possible drop in demand in 2014 as a result of the consumption tax hike, but we think it inconceivable that it would fall below the 2013 level,” he said.