TOKYO (Reuters).-The tension between Russia and Ukraine which is an exporter of steel products will have a large impact on global steel demand, trade and consumption if it goes on for a while, said the head of a Japanese industrial group.

Eiji Hashimoto, Chairman of Japan Iron and Steel Federation, stated that even before the Ukraine crisis we faced three risks to reduce steel demand: China’s slowdown and global chip shortage, and rising energy and natural resource prices.

These risks are greater because of Russia-Ukraine conflicts and there will be a significant impact on global demand for steel if this continues,” he stated, noting that Russia and Ukraine both have large presences in the steel market.

Hashimoto said that the latest plunge in the yen against US dollars poses a significant challenge for Japanese manufacturers, as certain industries are still struggling to overcome inflation pressure and pass on rising prices.

Hashimoto is also president of Nippon Steel Corp. “In 2012, Japan was helped by a weak yen to regain global competability. However, the situation now is very different.”

Shinzo Abe, the former Japanese Prime Minister rose to power in 2012. He introduced bold policies called “Abenomics”, which helped to revive the economy. They also increased corporate profits. The yen fell to 120 yen after it had fallen to 80 yen.

Hashimoto stated that the recent yen tumble has increased Japan Inc’s costs. Japan Inc already faces rising energy and resource prices as a result of the global economic recovery following the pandemic-induced slump, and a growing trend towards decarbonisation.

Japanese companies had been trying to manage a stronger currency, but now the weaker yen has a significant negative effect. Japan is facing a significant challenge, he stated.