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

Nippon Steel reduces the production by around 1 million tonnes in fiscal 2008 ending March 2009 from previous year to meet slower demand under US financial crisis. The firm reduces the steel shipment by 1 million tonnes mainly for export market while the firm reduces the raw steel output in line with the shipment reduction. The parent company’s steel shipment will be around 31.9 million tonnes and the raw steel output will be around 32.11 million tonnes in fiscal 2008, both of which is around 1 million tonnes lower than fiscal 2007.

The steel shipment increased to 16.37 million tonnes in April-September from 16.04 million tonnes in same period of 2007. The shipment is expected to be 15.53 million tonnes in October-March period compared with 16.86 million tonnes in same period of previous year. The shipment in the second half year is 840,000 tonnes lower than the first half and 1.33 million tonnes lower than same period of previous year.

The firm expected as of April the raw steel output would be 33.11 million tonnes in fiscal 2008 as fiscal 2007. The output was 16.57 million tonnes in the first half compared with 16.21 million tonnes in same period of 2007.

The firm decided the wide output cut when financial crisis impacts broadly on industrial activity. The vice president Kiichiroh Masuda sees the offshore steel demand started to decrease for commodity products. He said Japanese steel demand also started to decrease even for high valued products when some automakers and construction machinery makers revised the output plan downward while the demand keeps firm for shipbuilding and energy industry.

JFE Steel also revised the raw steel output plan downward to 30.5 million tonnes in fiscal 2008 compared with original 30.8 million tonnes. The output will decrease by around 500,000 tonnes in the second half year from the first half.

Nippon Steel and JFE Steel expect the shipment will decrease when they try to adjust the output to slower demand. Such output cut move could be followed by other Japanese major steel makers.