Nippon Steel to Keep Historical Production Cut in April-June

Nippon Steel plans to keep low level production in April-June as the record low of 4.67 million tonnes of raw steel output in January-March. The vice president Kohzoh Uchida said to Japan Metal Bulletin the firm tries to minimize the operation cost while the firm keeps the major production cut until steel demand recovers. He said the firm focuses on normalization of steel inventory under very slow demand while the firm keeps watching the market to meet demand in the recovery phase.

Mr. Uchida said the domestic demand just started to show sign to hit bottom. He expects the major users including automakers and appliances makers improve the production level to actual demand when they finish inventory adjustment by June while inventory adjustment could continue at least through September for industrial and construction machinery.

Mr. Uchida warns the demand could keep very low level through the year when automakers’ production plan could decrease to 8.5-8.6 million units for finished car in fiscal 2009 ending March 2010 compared with original 8.8 million units. He also expects the demand could increase slightly in and after July both for construction and manufacturers while the demand recovery could be limited depending on the world economy.

Mr. Uchida said the firm also improves global supply network to grow as global player in the demand recovery phase. The firm launches no.3 hot-dip galvanizing line at the joint venture, Baosteel-NSC/Arcelor Automotive Steel Sheets (BNA) in Shanghai in March 2010 as scheduled. The firm also launches no.2 hot-dip galvanizing line at the joint venture, UNIGAL in Brazil in first half of 2011 while the firm suspended the galvanizing line expansion at the US joint venture with Arcelor Mittal. The firm prepares to meet potential demand growth for high valued steel.