Japan's Response to U.S. Tariffs: Reluctance to Retaliate Amid Economic Concerns

Japan, U.S. Tariffs

The Japanese government has expressed disappointment over the U.S.'s recent decision to impose a 24% tariff on Japanese imports. However, despite this setback, Japan appears unlikely to take retaliatory measures against the U.S., citing concerns about the potential negative consequences for its national security and economy.

Japan's Diplomatic Stance on U.S. Tariffs

Japanese Minister for Trade and Industry, Yoji Muto, conveyed the country's frustration with the U.S. tariff decision, stating that it was "regrettable" despite Japan's request to be excluded from the measure. However, Muto indicated that retaliatory tariffs might not serve Japan's best interests, leaving the door open for diplomatic negotiations instead. Japan’s reluctance to retaliate likely stems from the nation’s reliance on the U.S. for national defense, given the significant role of the U.S. military in Japan's security arrangements.

Focus on Domestic Support Rather Than Retaliation

In response to the new tariffs, Japan is prioritizing support for its domestic industries over direct retaliation. Prime Minister Shigeru Ishiba promised financial assistance for affected sectors to mitigate the economic impact of the tariffs. The Ministry of Economy, Trade, and Industry has also formed a task force to explore other potential measures to support industries, particularly in sectors hit hardest by the tariffs.

Impact on Japan’s Automotive Industry

The U.S. tariff decision comes at a time when Japan's automotive industry is poised to feel the brunt of additional trade barriers. On April 3, the U.S. is expected to impose a 25% tariff on automobile imports, a measure that would significantly affect Japan’s top export industry. In 2024, Japan exported approximately 1.3 million vehicles to the U.S., with the U.S. accounting for over one-third of Japan’s total passenger car exports.

Japan's Path Forward: Economic Resilience and Diplomacy

Although Japan has refrained from retaliating, the country is clearly focused on cushioning its industries from the blow of new tariffs. With automobile exports under threat and broader economic uncertainties ahead, Japan will likely continue to emphasize diplomatic avenues and domestic support mechanisms to safeguard its economic interests.

Japan's Lithium Imports Drop Amid Slow EV Market in 2024

Lithium Mining

Decline in Lithium Carbonate Imports and Slight Increase in Lithium Oxide and Hydroxide

Japan has experienced a significant reduction in lithium carbonate imports in 2024, signaling a shift in the country’s energy and automotive sectors. While lithium oxide and hydroxide imports have seen a modest rise, the broader context of a sluggish global electric vehicle (EV) market has heavily influenced these changes.

Sharp Decline in Lithium Carbonate Imports

In 2024, Japan’s imports of lithium carbonate plunged by 40%, with a total of approximately 11,520 tons imported, according to data from Japan’s finance ministry. This represents a stark contrast to previous years when imports showed more consistent growth. Imports from Chile, the top supplier, saw a dramatic drop of 55%, with imports falling to about 5,143 tons. Argentina also experienced a decline in exports to Japan, falling by 5.6%, while Chinese imports dropped by 34%, totaling around 1,908 tons.

Increase in Lithium Oxide and Hydroxide Imports

On the other hand, Japan’s imports of lithium oxide and hydroxide showed a slight increase of 6% in 2024, reaching approximately 37,640 tons. A key contributor to this increase was a rise in imports from China, which edged up by 4.6%, amounting to about 32,354 tons. Interestingly, imports from Chile saw a significant uptick, rising to 1,872 tons, a notable increase from the 138 tons recorded in 2023. However, imports from the U.S. dropped by 24%, falling to 3,338 tons.

Declining EV Demand and Impact on the Domestic Market

Japan’s domestic electric vehicle market also faced challenges in 2024, with sales of passenger EVs falling by 33% due to weaker demand for local brand vehicles. According to preliminary data from industry associations, such as the Japan Automobile Importers Association (JAIA) and the Japan Light Motor Vehicle and Motorcycle Association, this drop in sales reflects broader trends in consumer preferences and economic conditions.

To stimulate the domestic EV market and boost the steel industry, Japan’s Ministry of Economy, Trade, and Industry (METI) announced plans to increase subsidies for EV purchases starting from April 2024. This initiative aims to encourage the adoption of electric vehicles and provide relief to Japan’s steel sector.

Japan’s Iron Ore Imports Drop in March Amid Weak Steel Demand

Iron Ore

March Iron Ore Imports Dip Despite Monthly Rebound

Japan's iron ore imports declined by 1.2pc year-on-year in March, reflecting weak steel demand and lower shipments from Brazil. The country imported 8.1mn tonnes of iron ore, although this marked a 28pc rise from February, according to preliminary finance ministry data.

The average import price was $102.20/t, down 17pc from the same month last year.

In yen terms, the price averaged ¥15,283, also a 17pc year-on-year decline, underscoring a softer raw materials market.

Brazil Shipments Fall Amid Weather and Maintenance Disruptions

Shipments from Brazil—Japan’s second-largest iron ore supplier—were disrupted by heavy rainfall and terminal maintenance. Brazil’s overall iron ore exports fell by 10pc year-on-year in February, reaching 24.5mn tonnes, the lowest level for that month since 2023.

Japan reportedly imported around 2.6mn tonnes from Brazil in March, but country-specific data will be confirmed later in April. The shortfall in Brazilian supply likely contributed to Japan’s reduced overall iron ore intake.

Domestic Steel Output Outlook Remains Sluggish

Japan's steel production is expected to fall by 4.9pc year-on-year in the April–June quarter. The trade and industry ministry (METI) projects steel output at 20.2mn tonnes, reflecting sluggish domestic demand in construction and manufacturing.

Lower steel production directly impacts iron ore requirements, weakening import volumes and softening global iron ore prices.

The Metalnomist Commentary

Japan's lower iron ore imports in March reflect a broader industrial slowdown and disrupted raw material flows. As steel production forecasts weaken, pressure mounts on iron ore prices and global supply chain predictability.

Japan's Non-Ferrous Metals Output Shows Mixed Trends for 2025

Copper

Japan's leading producers of non-ferrous metals project a mixed outlook for the October-March 2025 period, with zinc output expected to rise, while forecasts for copper production are varied. Recent data from major companies and the Ministry of Economy, Trade, and Industry (METI) highlights these trends, reflecting broader shifts in Japan's non-ferrous sector.

Zinc Production on the Rise, Copper Output Mixed

Mitsui Mining & Smelting, one of Japan's prominent zinc producers, forecasts a 5.9% increase in its zinc output, reaching 119,100 tons. The rise is attributed to expanded production capacity following regular maintenance conducted earlier this year between April and September. August data from METI supports this positive trend, showing a year-on-year increase of 8.8% to 34,191 tons in zinc production, marking the first growth in three months after a sharp 25.4% decline in July.

In contrast, the outlook for copper production is less straightforward. Sumitomo Metal Mining expects a robust recovery, projecting a 21.4% rise to 227,000 tons for October-March 2025. This rebound comes after planned large-scale maintenance at its Toyo plant in Ehime Prefecture, which had reduced output in late 2023. Similarly, Pan Pacific Copper, Japan's largest copper supplier, plans a 4.4% increase to 303,700 tons, indicating a positive trend in domestic copper production.

However, not all forecasts are optimistic. Mitsubishi Materials expects a 5.7% decrease in copper output, down to 196,578 tons, due to regular scheduled maintenance at its Naoshima plant in Kagawa Prefecture during the same period. Despite this, METI data shows that Japan’s electrolytic copper production has been rising consistently this year, with August output up by 4.7% year-on-year, marking seven consecutive months of growth.

These mixed projections underscore the complexity of Japan's non-ferrous metals sector, where varying maintenance schedules, production capacities, and external demand factors contribute to fluctuating output trends.

Japan’s Silicon Output to Recover in 2025 Amid Semiconductor Market Growth

Silicon Metal

Japan's domestic silicon output is poised for a significant recovery in 2025, driven by the global uptrend in the semiconductor market, according to a forecast from the Japan Society of Newer Metals (JSNM). Following a dip in 2024, Japan's silicon production is expected to grow by 10%, reaching 10,200 tonnes in 2025.

Semiconductor Market Recovery Fuels Growth

The forecasted recovery in Japan's silicon output is part of a broader global trend, particularly in the semiconductor industry. As the global semiconductor market rebounds, domestic silicon sales in Japan are also predicted to increase by 11%, reaching 11,600 tonnes in 2025. This growth will be split between exports and domestic consumption, with 7,850 tonnes projected to be exported and 3,750 tonnes to be consumed domestically. Both export and domestic consumption figures are set to rise by approximately 10-11% from the previous year.

Japan's semiconductor industry is benefiting from government support, which has been instrumental in boosting domestic production. The Japanese government has already allocated ¥3.9 trillion ($26 billion) to chip production, providing a solid foundation for future growth. On October 30, Japan further pledged to expand its public funding for AI and semiconductor investments, signaling a continued commitment to strengthening its semiconductor sector.

Global Semiconductor Market Shows Signs of Recovery

There are already signs of recovery in the global semiconductor market, which is expected to positively impact Japan's silicon output. Global silicon wafer shipments, a key indicator of semiconductor production, are believed to have hit their lowest point during the January-March period, with signs of growth emerging thereafter.

With both domestic and international factors contributing to the positive outlook, Japan's silicon output is set to experience a rebound in 2025, supporting the country's broader semiconductor industry and bolstering its role in the global supply chain.

Japan's Primary Aluminum Imports Rise Despite Weak Domestic Demand

Japan's Aluminum

Japan's primary aluminum imports increased by 1.9pc in 2024, reaching 1.05mn t. This rise occurred despite a decline in domestic demand from key sectors.   

Shifting Import Sources Offset Russian Decline

Australia remained Japan's largest aluminum supplier, accounting for over 28pc of imports. Brazil followed, contributing around 16pc. Notably, imports from the UAE and India surged, offsetting a significant drop in Russian shipments. The UAE saw a 14pc increase to 107,000t, while India's deliveries rose by 25pc to 103,000t. Conversely, Russian shipments plummeted by nearly 70pc to 26,000t, following Japan's import ban on certain Russian aluminum products in April 2023.   

Domestic Demand and Secondary Output Decline

Domestic aluminum product demand in Japan remained weak due to reduced activity in the building, construction, and automotive sectors. Building and construction consumption fell by 7.7pc, and automotive demand dropped by 4.1pc. Total aluminum demand decreased by 3.3pc. Japan's secondary aluminum output also declined by 4.9pc, leading to a 5.3pc decrease in aluminum scrap imports. The reduced domestic secondary output may have contributed to the increased primary aluminum imports, despite overall demand weakening.

Japan’s Domestic EV Sales Decline Amid Import Reductions

JAIA

In September, Japan’s domestic electric vehicle (EV) market continued its downward trend, marking the eleventh consecutive month of decline. Sales reached 6,429 units, reflecting a 28.7% decrease from the same period last year, according to preliminary data from key industry groups, including the Automobile Dealers Association and the Japan Automobile Importers Association (JAIA). However, on a month-to-month basis, sales saw a significant rebound of 45.3%.

Decline Driven by Reduced Foreign Imports

One of the key factors behind this persistent drop in EV sales is the reduced import of foreign EV models. Foreign brand EV sales fell for the second month in a row, reaching 2,739 units—a 13.4% drop compared to September of last year when imports exceeded 3,150 units. Despite this decline, imported EVs still made up 43% of Japan’s total EV sales in September, underlining their popularity among consumers, who favor the variety of models offered by foreign manufacturers.

On the domestic front, sales from local manufacturers have been sluggish. Notably, Nissan’s Sakura model, a leader in Japan’s EV market, saw a sharp decline of 34.6%, selling only 2,485 units in September. Despite this, the Sakura model still accounted for 38.7% of Japan’s total EV sales, underscoring its importance to the domestic market.

Japan’s Crude Steel Output Falls for Ninth Straight Month in November

JISF

Japan's crude steel production declined for the ninth consecutive month in November 2023, reflecting persistent weak demand from the construction sector. The country produced 6.9 million tonnes (mn t) of crude steel, a 3.1% year-on-year decrease, according to preliminary data from the Japan Iron and Steel Federation (JISF) released on December 20.

Production via the basic oxygen furnace (BOF) process remained stable at 5.1mn t, while output from electric arc furnaces (EAFs), commonly used for steel products in construction, fell by 11% to 1.8mn t. This marks the second consecutive month of double-digit declines for EAF production, signaling prolonged weakness in the construction industry.

Seasonal and Structural Challenges

The autumn months of October and November typically represent a peak season for Japan’s construction industry as firms push to complete projects before the disruptive winter months. However, rising material costs and labor shortages have dampened sentiment in the sector, further curbing steel demand.

The construction and automotive industries are critical to Japan’s steel market. BOF steel primarily serves the automotive sector, while EAF steel products cater heavily to construction. With construction activity lagging, EAF production has borne the brunt of the downturn.

Producers Adjust Output Forecasts

Japan’s major steel producer, JFE Holdings, revised its crude steel output forecast downward on November 6. The company now expects to produce 22.4mn t for the fiscal year ending March 31, 2025, 600,000 tonnes less than its earlier estimate. JFE attributed this adjustment to weaker-than-expected steel demand from the construction industry.

TotalEnergies to Supply 1GWh of BESS to Japan

Gurin Energy

Saft to Power Fukushima’s Energy Transition

TotalEnergies subsidiary Saft will supply over 1GWh of battery energy storage systems (BESS) for Gurin Energy’s renewable project in Japan. The system will include integrated lithium-ion batteries, power conversion units, and energy management platforms. Saft will also oversee installation, commissioning, and servicing, ensuring long-term operational reliability.

The BESS will be deployed in Fukushima Prefecture, delivering 240MW of power in four-hour cycles. Construction is expected to begin in 2026, marking one of Japan’s largest single-site BESS installations. This development highlights Japan’s efforts to stabilize its renewable power grid and enhance supply reliability.

Supporting Japan’s Renewable and Carbon Goals

Japan is targeting 40–50pc renewables in its power generation mix by 2040, up from 27pc today. The country also aims to achieve full carbon neutrality by 2050. Advanced storage solutions like Saft’s BESS are critical to balancing intermittent wind and solar generation.

Meanwhile, large-scale deployments like this project show how international partnerships can accelerate Japan’s clean energy transition. By supporting flexible storage capacity, TotalEnergies and Gurin Energy contribute to reducing reliance on fossil fuels while strengthening grid resilience.

The Metalnomist Commentary

TotalEnergies’ 1GWh BESS project in Fukushima illustrates the growing convergence of global energy players and local renewable developers. Japan’s aggressive carbon neutrality roadmap depends on scalable storage solutions, and this deal positions Saft as a key technology supplier. Investors should watch for how such projects influence Asia’s broader grid modernization strategies.

Japan’s Domestic EV Sales Decline for 12th Consecutive Month in October

Japan’s EV

The electric vehicle (EV) market in Japan continued to face challenges in October, with domestic passenger EV sales falling for the 12th straight month. Data from the Automobile Dealers Association, Japan Light Motor Vehicle and Motorcycle Association, and Japan Automobile Importers Association (JAIA) revealed a significant 35.1% year-on-year drop, totaling just 4,325 units sold. Month-on-month, sales decreased by 32.7%.

Declining Market Share for Domestic Brands

Domestic EVs accounted for only 1.3% of Japan’s total passenger car sales in October, down from 2.0% in the same period last year. A key contributor to this decline was the sharp drop in sales of Nissan’s Sakura, one of the best-selling models among Japanese brands. Sakura sales plummeted by 51.6%, recording just 1,448 units.

Imported EVs Remain Resilient Amid Supply Constraints

While foreign-brand EV sales also declined, the drop was less pronounced at 4% year-on-year, with 1,900 units sold in October. Volkswagen, one of the leading foreign brands, faced supply shortages that contributed to the downturn. However, imported EVs accounted for approximately 44% of Japan’s total EV sales, reflecting sustained demand for international models in the domestic market.

Toyota Revises Global EV Sales Outlook

Amid this downward trend, Toyota, Japan’s largest automaker, revised its global EV sales forecast on November 6. The company now expects to sell 160,000 EV units by the fiscal year ending March 31, 2025—a reduction of 11,000 units from its initial projection in May. This revision reflects broader challenges faced by Japanese automakers in the increasingly competitive EV market.

As Japan grapples with declining EV sales and shifting consumer preferences, the automotive industry faces mounting pressure to adapt and innovate.

🇺🇸 Japan’s Auto Industry Faces Crossroads Over US Tariff Strategy

🇺🇸 Japan’s

Tariff Pressures Stir Strategic Choices for Japanese Automakers

Focus Keyphrase: US auto tariffs impact on Japanese car industry

Japan’s automotive sector is at a critical juncture due to the 25% US import tariff imposed on April 3. Although the immediate impact has been muted, the industry is bracing for difficult decisions ahead.

The Ministry of Economy, Trade and Industry (Meti) reported on April 18 that Japanese carmakers haven’t yet seen significant fallout, thanks to existing inventories shipped before the tariffs took effect. However, manufacturers are now debating whether to pass on the cost to US consumers or absorb the losses.

Balancing Price and Demand

Raising prices risks dampening US demand — a major export destination accounting for over one-third of Japan’s vehicle exports. But absorbing the tariff costs would squeeze profit margins, especially for auto parts manufacturers, who are already under pressure to cut prices.

Meti’s survey noted growing concerns among component producers about production cuts if US demand falters. Japan Automobile Manufacturers Association chairperson Masanori Katayama hinted at production adjustments if the tariff persists.

Diplomatic Path Remains Murky

Japan and the US held ministerial talks on April 17, yet no clear resolutions emerged. Another round is planned this month. Still, analysts say the talks may stall unless the US addresses its auto trade deficit with Japan — a longstanding issue for former President Donald Trump, who has been vocal about the imbalance.

In 2024, Japan exported around 1.3 million passenger vehicles to the US, while importing only 23,000 US cars in 2023 — a stark contrast fueling trade friction.

Whether Japan’s carmakers cut production, raise prices, or find alternatives will shape the trajectory of its auto trade relationship with the US.

Japan’s Imports of Russian Palladium Rise for First Time Since Ukraine Invasion

Russian Palladium

2024 Sees 22% Year-on-Year Growth Despite Lingering Uncertainty

Japan’s palladium imports from Russia increased in 2024 for the first time since the start of the Russia-Ukraine war in 2022, signaling a potential shift in trade dynamics. According to Japan’s Finance Ministry, total imports reached 12 tonnes, up 22% from the previous year, breaking a six-year streak of decline.

Despite this rebound, it remains uncertain whether Russian deliveries will return to pre-invasion levels of 17–20 tonnes per year. The modest growth comes amid ongoing geopolitical tensions and evolving global trade strategies.

Import Diversification Efforts Appear Short-Lived

Following the 2022 invasion of Ukraine, Japan dramatically cut Russian palladium imports, which fell to 14.5t in 2022 (−19%) and then further to 9.9t in 2023 (−32%). Although palladium was not subject to direct sanctions, Japanese firms voluntarily reduced purchases over stakeholder concerns.

In response, Japan diversified supply in 2022, doubling imports from the U.S. (6.4t) and Italy (1t), while Taiwan and South Korea also saw sharp increases. However, these gains proved short-lived: in 2023, U.S. imports fell by over 50% to 2.8t, Taiwan’s dropped to 56kg, and South Korea’s dropped to 256kg, down 75% from 2022.

Since June 2024, Russian palladium shipments to Japan have exceeded 1 tonne monthly for seven consecutive months, suggesting tentative signs of recovery—but not yet a strong trend.

South Africa Remains Japan’s Dominant Supplier

While Russian supply fluctuates, Japan continues to lean heavily on South Africa, which delivered 23 tonnes in 2024—up 1.7% year-on-year. South Africa now accounts for 58% of Japan’s total palladium imports, marking the third consecutive year above 50%.

Analysts caution that despite recent increases, Japanese imports of Russian palladium are still well below historical averages. Whether a long-term recovery is underway will depend on market signals, policy sentiment, and the global palladium trade environment in 2025 and beyond.

Japan’s Nittetsu Joins Canadian Firm to Develop Chilean Copper Mine, Eyes Increased Output by 2033

Nittetsu

Japanese metal producer Nittetsu Mining has entered into a 50:50 joint venture with Vancouver-based Camino Minerals to advance copper production through the Puquios Copper Project in Chile's Coquimbo region, Nittetsu announced on October 8. This initiative aligns with Nittetsu’s mid-term goal of producing 50,000 tonnes of copper annually by 2033, a strategic objective in Japan's effort to bolster base metal self-sufficiency amid rising global demand for copper.

Investment and Production Outlook Remain Under Wraps

Although specific investment figures and expected production volumes of crude ore and copper concentrate have yet to be disclosed, the Puquios project is estimated to yield about 15,000 tonnes of copper equivalent annually. Commercial operations are projected to begin after environmental approvals, a process that could take several years. Nittetsu Mining's general manager, Shinichiro Mita, emphasized that this partnership leverages the company's technical prowess and longstanding expertise in copper production, underscoring Nittetsu's commitment to expanding its role in the global copper market.

The Puquios development is Nittetsu’s latest move in Chile. The firm has also been working on the Arqueros copper project, backed by the Japan Bank for International Cooperation (Jbic). Production at Arqueros is anticipated to reach 15,000 tonnes per year between April 2026 and March 2027, mirroring Puquios’ forecasted output.

Government’s Strategic Drive for Self-Sufficiency

Japan’s government has been actively encouraging domestic firms to secure copper sources abroad to address its base metal deficit. The country’s energy strategy, updated in 2021, targets a base metal self-sufficiency rate of 80 percent by 2030, up from 50 percent in 2018. Despite these ambitions, Japan’s Ministry of Economy, Trade, and Industry (Meti) recently acknowledged that the target is not on track, though it withheld details on current self-sufficiency rates.

Nittetsu expects copper prices to hold a bullish trend in the long term due to sustained demand for the metal, particularly for decarbonization and electrification initiatives. However, the company has cautioned that short-term copper price volatility may increase due to fluctuating global market conditions.

Sumitomo Metal Mining to Build Japan’s First Nickel Matte Plant

Sumitomo Metal Mining

Sumitomo Metal Mining (SMM), Japan’s leading metals producer, has announced plans to construct a 24,000 t/yr nickel matte plant in Miyazaki prefecture. The facility, to be built at SMM’s subsidiary Hyuga Smelting, marks a significant step in Japan's efforts to secure a domestic supply of critical battery materials. Construction is set to begin in 2025, with commercial operations expected between April 2027 and March 2028.

Nickel Matte: A Critical Link in Battery Material Supply

Nickel matte, a key intermediate product derived from ferronickel, is crucial for producing electrolytic nickel and battery-grade nickel sulphate, both essential for the growing lithium-ion battery sector.

Until now, SMM has relied on imports from its overseas subsidiaries for nickel matte. The new facility will enable the company to source this material domestically from Hyuga Smelting, reducing supply chain risks and enhancing Japan's resource independence.

The project has also garnered strong government support. On December 13, the Ministry of Economy, Trade and Industry (Meti) certified the initiative under its strategic plan to ensure a stable supply of critical metals for battery production. Meti will subsidize the project with ¥13.2 billion ($85 million), covering nearly half of SMM’s total investment of ¥28 billion.

SMM’s Vision for Nickel Production

The nickel matte plant aligns with SMM’s broader strategy to boost its production capacity for nickel products, including electrolytic nickel and nickel sulphate. The company aims to achieve a total annual output of 150,000 t of nickel products by 2030, further solidifying its role in the global battery materials supply chain.

Strategic Implications

As global demand for electric vehicles (EVs) surges, securing domestic production of key battery materials has become critical for nations worldwide. By building its first nickel matte facility, SMM is positioning Japan as a competitive player in the high-stakes race for battery-grade metals. This move also underscores the increasing importance of nickel in achieving sustainable energy goals and advancing EV technology.

Japan Increases EV Subsidies to Promote Green Steel Usage

Japan EV

New Incentives to Drive Adoption of Environmentally Friendly Steel

Japan's Ministry of Economy, Trade and Industry (Meti) has announced an increase in electric vehicle (EV) subsidies starting April 1st, aiming to promote the use of green steel. The new measure will provide up to ¥50,000 ($321) in additional financial support, expanding the subsidy to a total of ¥900,000 per EV, depending on the model and size, if it is manufactured with green steel. The initiative is part of Japan's broader green transformation policy to reduce greenhouse gas (GHG) emissions.

Meti has secured a budget of ¥110 billion for the EV subsidy program. The main objective of this increase is not only to boost EV demand but also to support the domestic steel industry. Green steel, though more expensive to produce, has the same functionality as conventionally produced steel, which emits higher GHGs. Meti is addressing concerns among domestic steel producers, who fear the higher production costs of green steel may deter consumers.

Shifting Steel Production to Electric Arc Furnaces

Japan's steel industry is making efforts to reduce GHG emissions, especially through the transition to electric arc furnaces (EAFs). However, EAF plants require significant investment and face various technical challenges. Japan's largest basic oxygen furnace (BOF) producer, Nippon Steel, began commercial operations of an EAF in 2022, and JFE Steel plans to launch its own EAF by 2027. Additionally, Kobe Steel intends to replace one of its BOFs with an EAF facility by 2027.

Despite these advancements, the Japan Iron and Steel Federation (JISF) reported a 3.4% decline in EAF-produced crude steel in 2024, with EAF production accounting for 26.2% of the country’s total crude steel production.

Challenges in Boosting Green Steel Production and EV Sales

Although Meti's measures aim to increase green steel production, there are doubts about their effectiveness, given the sluggish performance of the domestic EV market. Sales of domestic passenger EVs in Japan plummeted by 33% in 2024, largely due to reduced demand for local EV brands. EVs accounted for only 1.5% of total passenger vehicle sales in Japan, down by 0.7 percentage points from the previous year. This decline raises questions about whether the increased subsidies will be enough to stimulate demand for both green steel and EVs.

Japan Eyes Investments in Argentinian Lithium as Demand for Battery Metals Grows

Argentina lithium

Salta Province Attracts Japanese Interest Through RIGI and Strategic Bilateral Proposals

Japan eyes investments in Argentinian lithium to secure long-term access to key battery metals amid global electrification efforts. Japanese government officials recently met with authorities from Argentina’s Salta province to assess the region’s lithium reserves and explore opportunities for partnership. The talks focused on Salta’s lithium potential and included inquiries into major mining projects across multiple commodities—signaling broader strategic interest in Argentina’s resource sector.

While lithium was the main focus, Japanese officials also discussed First Quantum’s Taca Taca copper project, the Lindero gold mine operated by the UK’s Mansfield, and silver exploration by Abrasilver and Anglogold. Japan’s delegation reportedly requested support for a bilateral investment grant, which, alongside Argentina’s Régimen de Incentivo para Grandes Inversiones (RIGI), could fast-track Japanese capital into the province’s mining sector.

Argentina’s Investment Incentives Align with Japan’s Supply Chain Strategy

The RIGI framework offers approved projects reduced tax burdens, lower royalties, simplified customs procedures, and accounting flexibility. These benefits are designed to attract large-scale foreign investment into Argentina’s high-potential mining regions. As Japan eyes investments in Argentinian lithium, RIGI could serve as a key enabler for Japanese companies seeking stable, long-term access to battery-grade lithium and related critical minerals.

The visit underscores Japan’s strategy to diversify supply chains away from China, especially for electric vehicle and energy storage technologies. By tapping into Argentina’s lithium triangle, Japan can enhance its resource security while supporting Latin America’s role in the global clean energy transition.

The Metalnomist Commentary

Japan’s proactive engagement in Argentina’s Salta province reflects a targeted push to secure non-Chinese lithium supply. As battery metal demand accelerates, bilateral frameworks like RIGI and diplomatic investment channels will shape the next wave of global critical minerals partnerships.

Japan’s Domestic EV Sales Continue Decline in July, Driven by Sluggish Light Vehicle Demand

Japan's domestic electric vehicle (EV) market continued its downward trend in July, with sales falling by 20 percent compared to the same month last year. This marks the ninth consecutive month of year-over-year declines in the Japanese EV market, a reflection of waning consumer interest in light passenger EVs.

According to preliminary data from the Automobile Dealers Association, the Japan Light Motor Vehicle and Motorcycle Association, and the Japan Automobile Importers Association (JAIA), total EV sales in July reached 5,072 units. Although this represents a slight 1.2 percent increase from June, the overall market share of EVs in Japan's passenger car sector dropped to 1.5 percent, down 0.5 percentage points from the previous year.

The most significant contributor to this decline was the sharp fall in light passenger EV sales, which plummeted by 35 percent to 2,362 units. The downturn was primarily driven by a 32 percent decrease in sales of Nissan's Sakura model, a vehicle that typically accounts for over 90 percent of light passenger EV sales in Japan. Light cars in Japan are defined by specific size and engine capacity criteria, making them a popular choice among domestic consumers.

On the other hand, ordinary passenger EV sales saw a modest recovery, rising by 1.2 percent year-on-year to 2,710 units. This marks the first year-on-year growth in this segment since November 2023, largely due to the continued popularity of imported EVs in the Japanese market. Foreign EV sales have been on the rise for five consecutive months, with July's figures showing a 28 percent increase to 1,689 units.

A representative from JAIA noted that, unlike the global EV market—where demand among higher-income consumers has slowed, particularly for luxury models—Japan's market for imported EVs remains robust and is expected to continue its upward trajectory.

Japan and South Korea Prepare for Economic Impact of US Metal Tariffs

Japan Manufacturing

Japan Takes a Cautious Approach, While South Korea Moves Quickly to Shield Its Automotive Industry

The imposition of US tariffs on metal products has left Japanese and South Korean industries scrambling to mitigate potential damages. Following US President Donald Trump's announcement of sweeping tariffs, Japan’s metal firms are proceeding with caution. Tokyo is currently working on a strategy to strike a middle ground while preparing for any potential long-term effects. South Korea, on the other hand, has moved quickly to put measures in place to support its automotive industry, which stands to be significantly impacted by the tariffs.

Japan's Response to US Tariffs

In 2024, Japanese exports of machinery and electrical equipment to the US amounted to ¥7.8 trillion ($53 billion), reflecting a 5.3% increase from the previous year. Despite this growth, Japan's metal industry is not experiencing significant immediate impact from the new 24% tariffs imposed on steel and automobile products. However, companies are still closely monitoring the situation to understand the full extent of the potential damages. While some industry leaders remain uncertain, one Tokyo-based battery material producer noted that no damage had been reported yet from clients. Still, Japanese authorities are wary of long-term effects, especially in sectors like electronics and automotive, which would face major setbacks should the tariffs persist.

The Japanese government is refraining from retaliatory measures as negotiations with the US government continue. Japan hopes to reach an agreement that could either reduce the tariffs or potentially exempt the country from them entirely. On April 8, Japan’s Ministry of Trade and Industry (METI) will hold a ministerial meeting to discuss comprehensive measures in response to the tariffs.

South Korea Takes Swift Action to Support Its Economy

South Korea, with a more direct approach, is preparing to unveil measures aimed at mitigating the negative effects on its automotive sector. In 2024, South Korea exported $127.8 billion in goods to the US, including nearly $34.7 billion worth of passenger automobiles, $7 billion in auto parts, and nearly $3 billion in lithium-ion batteries. With such significant exports to the US, the potential impact of these tariffs could be severe.

The South Korean government, led by acting president Han Duck-soo, has vowed to work with the private sector to minimize damage. The government is planning follow-up measures to protect vulnerable sectors, such as small-medium enterprises and mid-sized companies. However, the country’s political instability, with the impeachment of former president Yoon Suk Yeol, may delay the response. South Korea’s aluminium sector is also on high alert, with companies looking to devise strategies to weather the storm.

Additionally, South Korean tech giant LG Electronics has warned that any further escalation in tariffs could have a pronounced impact on its operations, especially if the US introduces import quotas or safeguard measures. The company’s major production sites are spread across South Korea, China, Mexico, and Vietnam. LG's CFO, Changtae Kim, emphasized that higher tariffs would directly affect the company’s competitive position.

Looking Ahead

Both Japan and South Korea face uncertain futures as they navigate the complex landscape of US tariffs. Japan remains cautious, hoping for negotiations to alleviate the pressure, while South Korea moves swiftly to protect key sectors like automotive manufacturing. The coming weeks will be crucial in determining how both nations adapt to the evolving trade situation and whether their efforts to shield their industries from the tariffs will be successful.

Japan Minimizes Concerns Over China's Antimony Export Controls

Japan's industrial sector is largely unphased by China's upcoming export restrictions on antimony, set to take effect on September 15. Thanks to proactive diversification of procurement sources, Japanese producers expect only a limited impact. While some in the market predict a rise in antimony prices ahead of the new regulations, there is no widespread panic.

China, the world’s largest producer of antimony, announced its decision to include antimony and related products in its export licensing scheme. Despite this, Japanese manufacturers have been preparing for such an eventuality by sourcing antimony from multiple Southeast Asian countries. "We have long been hedging the supply source risk," a Japanese market insider told Metalnomist, emphasizing the importance of not relying solely on China.

Japanese producers are also bolstering their stockpiles by increasing purchases from broader parts of the Southeast Asian market, with an eye on a potential supply crunch. This strategic move has already triggered a rise in the prices of antimony trioxide and ingots, with further increases anticipated as the export restrictions draw nearer.

However, not all Japanese producers are convinced that prices will continue to rise. Some believe that market demand will be the ultimate determining factor, drawing parallels to the drop in gallium prices following a similar Chinese export control announcement in July 2023.

Currently, Japan's domestic demand for antimony remains stable but low, with little sign of recovery. While some experts predict a rebound in the manufacturing sector, including electronics and industrial machinery, later this year, the antimony industry itself is more cautious.

In the first half of 2024, China supplied about 44% of Japan's total antimony in block or powder form, with Vietnam and Thailand contributing 26.9% and 16%, respectively. China's dominance was even more pronounced in the antimony trioxide market, where it accounted for 87% of Japan’s imports.

Idemitsu to Build Lithium Sulphide Plant in Chiba to Support Toyota’s All-Solid-State Battery Rollout

Idemitsu, Lithium Sulphide Plant

$142 Million Facility to Produce Key ASSB Material for 3GWh Annually, Backed by Japanese Government Subsidies

Idemitsu Advances Battery Strategy with New Lithium Sulphide Facility

Japanese energy firm Idemitsu Kosan has announced plans to construct a large-scale lithium sulphide production plant in Chiba, with completion targeted for June 2027. The project is part of Idemitsu’s broader strategy to establish an integrated supply chain for all-solid-state battery (ASSB) production—a technology expected to define the next generation of electric vehicle (EV) batteries.

The plant will produce lithium sulphide at volumes equivalent to powering 3GWh of ASSB output annually, reinforcing Japan’s position in the global battery supply chain. The ¥21.3 billion ($142 million) investment will be partially supported by ¥7.1 billion in government subsidies, according to Idemitsu.

ASSB Seen as Next-Generation EV Battery Solution

ASSBs offer significant advantages over traditional lithium-ion (Li-ion) batteries, including faster charging, higher energy density, better thermal stability, and reduced use of critical metals like nickel and cobalt. These benefits make them highly attractive for next-generation EV platforms.

In October 2023, Idemitsu and Toyota announced a partnership to commercialize ASSB for EVs by 2027–2028. Under this plan, Idemitsu will supply solid electrolytes, derived from its lithium sulphide, while Toyota integrates them into EV battery systems. Toyota’s goal is to produce vehicles capable of driving up to 1,200 km on a single charge—more than twice the range of its current EVs.

Integrated Upstream-Downstream Supply Secures Japan’s Battery Future

Idemitsu will manufacture lithium sulphide by processing lithium hydroxide sourced from its Australian mining assets with sulphur by-products from its oil refining operations. This vertically integrated model reflects Japan’s push to reduce battery supply chain dependencies on China while leveraging domestic expertise in refining and manufacturing.

As Japan’s second-largest oil refiner, Idemitsu is uniquely positioned to transform its fossil fuel legacy into a clean tech future. The company also plans to produce several thousand tonnes of solid electrolyte materials to support full-scale ASSB deployment across Toyota’s production lines.