JFE Steel plans to cuts crude steel production by 4mn mt to better align the company’s capacities to the changes occurring in the domestic as well as global steel industry. JFE will consolidate its Japan operations to seven blast furnaces down from the current eight furnaces, according to a company release on Friday. JFE aims to maximise its capacity utilisation and improve earnings through this structural reform.
Iron and steelmaking, hot rolling processes at JFE’s Keihin, East Japan Works will be shut down by March 2024. Blast furnace, electric arc furnace, shaft furnace, coke ovens, sintering machine, converter, continuous casting and hot rolling equipment will be shut. Most operations of its plant will be consolidated in Chiba.
Facilities in Keihin will produce steel plate for construction and pipe products. JFE’s West Japan Works and other facilities will supply semi‐finished products to the facility. The continuous casting unit at Kurashiki No. 7 will supply high-quality steel plate mill. The unit is scheduled to start by the end of fiscal 2020.
JFE Steel plans to invest and strengthen its West Japan Works as its main steel production unit. JFE’s Chiba plant will remain an integrated blast‐furnace base to produce auto steel sheets, stainless steel and iron powder. Chiba’s No. 6 blast furnace would be refitted by 2023 while the unit producing sheet for cans will be shut in fiscal 2022.
The structural reforms aim to reduce JFE’s fixed costs and improve annual profits by over JPY60bn. For the first time in the company’s history, in fiscal year 2019, JFE Holding will book a loss. The company revised its earnings estimated downwards on Friday. JFE has forecasts a JPY190bn ($1.75 bn) net loss for the fiscal year ending March 2020 (FY2019) compared to a previously forecasted net profit of JPY13bn. JFE Holding has booked for an impairment loss of JPY220bn in the steel business. In FY2018, JFE Holding reported a net profit of JPY163bn.
As part of its international operations, JFE will continue to focus on producing auto steel sheets in China, Mexico, Indonesia and Thailand by using substrates from Japan. JFE Steel plans to strengthen its partnerships with JSW Steel, India and BaoWu Steel, China, and in a construction steel sheet venture in Myanmar.
($1=JPY108.75)