Nippon Steel to cut 10% of steel output capacity, sees record FY loss
Japan’s Nippon Steel Corp 5401.T, the world’s third-biggest steelmaker, said on Friday it will cut nearly 10% of its crude output capacity to improve competitiveness and will book a record net loss of $4 billion this financial year.
Japanese steelmakers face a future of stagnant domestic growth as the population declines, while competition abroad grows as other Asian countries step up output and trade conflicts escalate.
Nippon Steel, Japan’s biggest steelmaker by steel output, will shut the entire Kure Works, in western Japan, including two blast furnaces, by the end of September in 2023.
It will also close one of the two blast furnaces at Wakayama Works, where drilling pipes and pipelines used in oil and gas fields are manufactured, in 2022.
Nippon Steel plans to book an impairment loss of 396.6 billion yen ($3.61 billion) on its domestic steelworks including Kure Works in the October-December quarter.
As a result, it slashed its net earnings forecast for the current business year to March 31 to a record loss of 440 billion yen from an earlier estimate of a profit of 40 billion yen.
Earnings have been hit as slumping steel prices in Asia dented export margins and a series of suspensions at local facilities caused by typhoons and fires interrupted production.
Nippon Steel, which has 15 blast furnaces across Japan with an annual output of 52 million tonnes of crude steel, had flagged that it planned close one of the two furnaces in the Kure by March 2024, as well as another at its Yawata Works in Kokura on the island of Kyushu by March next year.
Last year, crude steel output in Japan, the world’s third-biggest steel producer, fell 4.8% to 99.28 million tonnes from a year earlier, falling below 100 million tonnes for the first time in 10 years, according to the Japan Iron and Steel Federation.
Meanwhile, global crude steel production reached 1.87 billion tonnes last year, up 3.4% from 2018, data from the World Steel Association showed. Output from China, the world’s biggest producer and consumer, climbed to a record just shy of 1 billion tonnes.
Source: Reuters (Reporting by Yuka Obayashi, Editing by Sherry Jacob-Phillips and Lincoln Feast.)