Nippon Steel to Cut Output 1 million tonnes Additionally in 2H

Nippon Steel’s president Shoji Muneoka said on Tuesday the firm expands the output reduction to more than 2 million tonnes in the second half year to March 2009 compared with the original plan. The firm expands the output reduction by more than 1 million tonnes under slower steel demand while the firm announced around 1 million tonnes of output reduction last month. Mr. Muneoka said the firm could reduce the output more depending on the market while the firm decided the additional output reduction based on estimated steel demand through March 2009. Mr. Muneoka said the output level would be low level in fiscal 2009 starting April 2009 when the demand shows no sign for recovery in short period of time.

Mr. Muneoka said at the monthly press conference as the chairman of Japan Iron and Steel Federation Nippon Steel’s output reduction will be around 2-2.2 million tonnes for the second half year compared with the original plan. He said the demand decreases sharply for automobile industry while the domestic building activity is still low level and the demand shows sign to decease for construction machinery and shipbuilding. He said the firm’s output reduction is to meet estimated demand for domestic industry and export mainly for East Asia. However, he said the firm wouldn’t produce for inventory and indicates additional output reduction depending on the market.

Nippon Steel planned 33 million tonnes of raw steel output for fiscal 2008 for the parent firm compared with 33.1 million tonnes in fiscal 2007. The firm announced the 1 million tonnes of output reduction for the second half under the slower demand. However, with the additional 1 million tonnes of output cut, the annual output will be 31 million tonnes for fiscal 2008, which represents first drop in 4 years. The output in the second half is expected to be around 14.4 million tonnes compared with 16.57 million tonnes in the first half.

Mr. Muneoka said the financial crisis started to impact on the industrial activity and the impact is showed in the wide range including financing, loan and trade banking. He said the economy couldn’t recover in short term and the steel output level could be low level in fiscal 2009.