Nippon steel plans to shut down two more furnaces to better align its upstream capacities with the slow domestic steel demand and increased competition from Chinese producers. The company will shut one more blast furnace and one EAF.
The steelmakers presented a new management plan on March 5 which builds up on the earlier Feb 7, 2020 structuring plan. The new plan revolves around making Nippon Steel a 100mn mt global steel capacity company while rebuilding its aging domestic steel facilities. Nippon also aims to produce Zero-carbon steel and become carbon-neutral by 2050.
Nippon’s domestic business is suffering due to a decline in steel demand and lower profitability from exports, which is expected to continue over the long-term. The company find it impossible to revitalize its domestic business amid high Capex and costs to rebuild aging plants. The plan emphasizes concentrating production at selection plants and focusing on strategic products while reducing the output of commodity-grade products.
Nippon plans to shut No. 3 blast furnace (BF) at Kashima, East Nippon works by the end of FY2024, in addition to the earlier announced the shut down of No. 1 and No. 2 BF at Setouchi works in Kure area by H1 FY2021 and No. 1 BF at Kansai works in Wakayama area by H1 FY2022 (was scheduled to shut in H1 FY2021). One electric blast furnace at Nippon Steel Stainless’ Yamaguchi works will be shut by the end of FY2023.
With the implementation of the latest measures to streamline its steelmaking and manufacturing processes, Nippon Steel’s BF count will fall to 10, down from the existing 15. One BF (Kokura) was shut in FY2020, according to the earlier plan. These shut down will reduce Nippon’s combined capacity by 10mn mt or down by 20pc taking its non-consolidated crude steel capacity to 40mn mt from the 50mn mt, which includes Nippon SS. These production realignments will reduce the company’s annual costs by JPY150bn ($1.38bn).
| Nippon’s steel facility restructuring | |||
|---|---|---|---|
| Plan | Steel plant | Shutdowns | Date |
| New plan | East Nippon Works Kashima Area | One series (No.3 BF, No.2-A, B, C, D coke ovens, No.3 sintering machine, and No.1 steelmaking plant) | By end of FY2024 |
| New plan | East Nippon Works Kimitsu Area | No.1 continuous casting machine | By end of FY2021 |
| Feb-20 | Kansai Works Wakayama Area | One series (No.1 BF, No.5 coke oven, No.5-1 sintering machine) currently suspended | By end of H1 FY2021 |
| Feb-20 | Kansai Works Wakayama Area | One series (No.4 coke oven, part of No.3 continuous casting machine) | H1 FY2022 |
| Feb-20 | Setouchi Works Kure Area | All upstream units (BF, sintering, steelmaking) | By end of H1 FY2021 |
| Feb-20 | Setouchi Works Hirohata Area | Melting furnace (→ New EAF) | H1 FY2023 |
| Mar-15 | Kyushu Works (Kokura) | All upstream units (BF, sintering, steelmaking) | Closed – Sep 2020 |
| Nippon Stainless Steel | |||
| New plan | Shunan – Yamaguchi works | One EAF | By end of FY2023 |
The company will also restructure its downstream capacity levels with the addition of a new hot-dip galvanizing line to focus on high-value added products and improve profit per ton.
Reduction of steel plate lines
Nippon will shut the steel plate mill at East Nippon works Kashima area by H2 FY2024 with the production transferred Kimitsu and the Kyushu. This is in addition to the closure of the plate mill at the Nagoya by the end of FY2021, as per the earlier plan. Following the implementation of the plan, Nippon’s steel plate line will be reduced to two from the existing 4 lines.
Cut down in construction products
Shape mills at Kimitsu and Kashima area in the East Nippon Works will be shut by the end of FY2021 and FY2024, respectively, with production transferred to Kansai works (Sakai) and the Kyushu works. Nippon will also close down the continuous casting machine for large steel pieces. Shape mills will reduce to two from existing four.
Reduction of pipe and tube mill
Nippon will close its small-diameter seamless pipe mill at Kansai West works and close down its only large-diameter (UO) pipe facility at East Nippon works, Kimitsu amid concerns around sustainable profits. With this, Nippon’s seamless pipe mills count will reduce to two from three. The small-dia mill will close by the end of FY2025, while the large-dia will shut by the end of FY2021.
Flat products
To increase the competitiveness of its steel sheet business, Nippon will shut down one hot-dip galvanizing facilities at the East works Kimitsu and a pickling line in Kashima by the end of FY2024 and the end of H1 FY2022, respectively. Similarly, some hot-dip galvanizing line will be shut at the Setouchi works. High-carbon sheet lines will be also shut at Setouchi Works and Kansai works.
Post the implementation of these measures, hot-strip mills will reduce to 6 mills from the existing 7, cold-rolling mills to 15 from the existing 17 and galvanizing lines to 16 from 19 lines.
($1=JPY108.3)