TOKYO- JFE Steel Corp will halt one of its blast furnaces in eastern Japan, scaling back its domestic production of crude steel by around 4 million tons or about 13 percent, in response to sluggish demand at home and abroad.
Japanese steelmakers have been hit by the effect of U.S.-China trade frictions and a shrinking domestic market but the ongoing expansion of new coronavirus infections may further dampen global demand for the material, used widely in manufacturing industries.
JFE Steel will stop output of crude steel at No. 2 blast furnace in its East Japan Works plant in Kawasaki, Kanagawa Prefecture, by the end of March 2024. The suspension will reduce the number of blast furnaces the steelmaker operates to seven.
JFE Steel’s parent JFE Holdings Inc downgraded the same day its earnings outlook. It now expects to fall into the red and is forecasting losses of 190 billion yen ($1.74 billion) for the year through the end of this month, from an earlier estimated net profit of 13 billion yen.
This reflects expected losses related to the blast furnace suspension at East Japan Works and other measures taken to streamline operations.
“We are facing an extremely severe operating environment that we have never experienced before. We will thoroughly concentrate our resources selectively to create a more streamlined and resilient company,” JFE Steel President Yoshihisa Kitano said.
Japan’s largest steelmaker Nippon Steel Corp also said in February that it will close its Kure Works in Hiroshima Prefecture and stop output at one of the furnaces at its Wakayama Works, citing the need for massive restructuring to cut back domestic output.
Global steel prices remain under pressure, with aggressive production by Chinese steelmakers causing a supply glut, while domestic demand for steel has been slowing due to the shrinking market.
Originally published on www.japantoday.com