Japan Major 5 Steels’ Output Cut to Expand to 4-5 million tonnes in 2H

Japanese major 5 steel makers’ output reduction could expand to 4-5 million tonnes in second half year to March 2009 while the makers planned around 2 million tonnes of production cut before. Nippon Steel and JFE Steel announced additional output reduction and indicated further cut depending on the market when the financial crisis impacts on industrial activity broadly. Sumitomo Metal Industries, Kobe Steel and Nisshin Steel also revise the production plan for further production cut.

The major 5 steel makers announced the 2 million tonnes of output cut until early November. However, the market condition gets worse further when domestic construction activity decreases while manufacturing activity sharply drops for automobile and construction machinery. The shipbuilding activity shows sign to slow down from the boom. The steel export market also gets worse in East Asia.

Nippon Steel announced the firm expands the output reduction to more than 2 million tonnes in the second half year while the firm announced around 1 million tonnes of production cut in October. JFE Steel also expanded the production cut from around 500,000 tonnes to 1.5 million tonnes.

Sumitomo Metals plans 100,000 tonnes of production cut for the second half year from the first half. The output reduction plan is 200,000 tonnes for Kobe Steel and 140,000 tonnes for Nisshin Steel. However, they also revise the plan to meet slower demand than expected.

Japanese raw steel output hit record 121.52 million tonnes in fiscal 2007 after the continuous increase since fiscal 2002 under worldwide economy growth. Japanese major 5 makers expanded the output by 15 million tonnes during the period and reached around 90 million tonnes in fiscal 2007. The output increased in the first half from same period of 2007. However, the output drops sharply in the second half after the US financial crisis impacts on the Europe and developing countries.