Alexandru Arba
Research expert covering Japan
Steel industry in Japan - statistics & facts
Japan is one of the largest steel-producing countries worldwide. Driven by the big demand of domestic industries, most notably the construction and automobile manufacturing industries, much of the output of the steel industry is destined for domestic consumption. However, Japan produces considerably more steel than it can consume. A substantial chunk of domestically produced steel and steel products are exported, making Japan one of the largest steel exporters in the world. Japan's steel manufacturing industry is dominated by three companies, namely Nippon Steel, JFE, and Kobe Steel. Together, they provide work for hundreds of thousands of people and comprise the vast majority of the revenue generated in the steel industry.
In light of possible global supply chain disruptions and price hikes on the international market, the dependency on raw material imports poses a threat to Japan's steel manufacturing industry. Furthermore, it can also seriously affect two of the largest segments of Japan's economy: the construction and the automobile manufacturing industries that are both highly reliant on steel production.
Steel manufacturing will continue to be an indispensable part of Japan's economy, as two of its core sectors, the construction, and automobile industries, rely on steel. Japan's ambition to achieve a carbon-neutral economy presents steelmakers with new challenges and opportunities alike. To comply with these expectations, Japanese steelmakers will need to shift from traditional emission-intensive to carbon-neutral production methods while striving to remain competitive on the international market.
Dependency on raw material imports
Even though Japan is one of the leading steel producers worldwide, its mining industry provides almost none of the basic raw materials necessary for steel production. The main materials required for steel production are iron ore and coal in the form of coke. In both cases, Japan's self-sufficiency rate is below one percent. Hence, steel manufacturers heavily rely on imports of prime materials, with Australia being the most prominent source of coal, coke, and iron ore.In light of possible global supply chain disruptions and price hikes on the international market, the dependency on raw material imports poses a threat to Japan's steel manufacturing industry. Furthermore, it can also seriously affect two of the largest segments of Japan's economy: the construction and the automobile manufacturing industries that are both highly reliant on steel production.
Cutting down emissions
Traditional steel production involves high carbon gas emissions, and emissions from the steel industry continue to account for a considerable share of emissions within Japan’s industrial sector. To achieve Japan’s ambitions of carbon neutrality by 2050, various methods are being considered to make the steel industry in Japan greener. One possibility would be to expand investments in carbon capture and storage (CSS) technologies. Another option would be to increase the use of electric arc furnaces. These furnaces use scrap steel, often recycled from buildings and cars, as the most common ingredient in the steel manufacturing process. This omits the carbon gas emission-heavy process of reducing iron ore to iron, making it considerably less polluting. Lastly, the use of green hydrogen instead of coke to reduce iron ore can greatly contribute to fewer carbon gas emissions in the steelmaking industry.Steel manufacturing will continue to be an indispensable part of Japan's economy, as two of its core sectors, the construction, and automobile industries, rely on steel. Japan's ambition to achieve a carbon-neutral economy presents steelmakers with new challenges and opportunities alike. To comply with these expectations, Japanese steelmakers will need to shift from traditional emission-intensive to carbon-neutral production methods while striving to remain competitive on the international market.
