The survey shows that the possibility of risk reigniting in the steel industry in China is emerging. According to data released by the World Steel Association, global crude steel production in April increased by 5% compared to the same month last year, reaching 142 million tons, marking a continuous increase for 12 months. The driving force behind this is China, which accounts for half of the world's crude steel production. China's output has reached a historical high for two consecutive months. Japanese domestic steel companies are increasingly worried about being caught up in the fluctuations of Chinese steel prices.

　　According to a report by the Nikkei on May 26, 'Since around April, Chinese processing companies have adopted a wait-and-see attitude. This trend has gradually become apparent,' said relevant personnel from Japan's steel distribution industry analyzing China's steel market. Looking at hot-rolled coils widely used in automobiles and home appliances, domestic trading prices in China entered an upward trend after autumn 2016, rising to about $500 per ton in February 2017. Subsequently, due to the drag from falling raw material prices, it has dropped about 20% compared to its recent peak in mid-April. Although there has been a slight recovery now, uncertainty remains.

　　The report states that even minor changes in China's overwhelming production capacity will have a huge impact on global steel companies.

　　'About 30% of overall steel production is completely linked to international market trends,' said JFE Holdings President Eiji Hayashida while analyzing the company's operating environment. The Japanese domestic steel industry actively promoted restructuring after the 2000s and was almost entirely merged into two major groups: Nippon Steel & Sumitomo Metal and JFE Holdings. It was originally thought that this would enhance price negotiation power with demand-side customers; however, the expansion speed and impact of crude steel production in emerging markets like China exceeded expectations. Nippon Steel & Sumitomo Metal's standalone performance for fiscal year 2016 (ending March 2017) fell into operating losses for the first time in four years, significantly reducing profitability. 'Our past efforts to promote restructuring were completely erased by China's massive increase in production,' recalled a key figure involved in promoting steel restructuring.

　　The report suggests that 'iron means nation', with steel production symbolizing national strength. Japan was the world's largest producer of crude steel at the beginning of the 1990s but was surpassed by China in 1996; now there is an eightfold difference between their outputs. Additionally, based on data from March 2017 (preliminary value), Japan has also been overtaken by India. Although Japan returned to second place again according to April's (preliminary value) statistics, India is advancing its blast furnace expansion projects. Japan may soon become a stable 'world third'.

　　The Nikkei states that China's increase in production and India's rise have completely shifted global leadership in the steel industry from developed countries like Japan and the U.S. to emerging market countries.