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Japan’s largest steelmaker, Nippon Steel, has denied media reports of halting one of its two blast furnaces at Kashima works, near Tokyo. Earlier this week, news reports said Nippon Steel would cut domestic capacity by upto 20pc to strike a supply-demand balance and improve profitability. The company release stated Nippon is working towards improving its steelmaking competitiveness and will announce measures when finalized. 


The steelmaker had over 14 blast furnaces installed and operational in Japan before the COVID-19 pandemic. Steel demand has been recovering slowly in the domestic market, especially in the auto sector, post the peak of the pandemic. In 2020, economic activities slowed due to the impact of the pandemic and steel supply outpaced consumption in Japan


Nippon had announced a restructuring plan in November 2019, according to which the steelmaker would suspend operations at two blast furnaces in Kure, Hiroshima prefecture, by September 2021 and could cut production at another blast furnace in the western city of Wakayama, by September 2022. This will reduce the total number of operational blast furnaces in Japan to 11, lowering domestic production capacity by over 10pc. The capacity cut was to align production targets amid the rising competition from China and weak domestic steel demand. 


During COVID-19 lockdowns, several furnaces were shut lowering their capacity up to 32pc, those furnaces were refired following demand recovery. 


In November 2020, the Japanese government declared its commitment to reduce CO2 emissions and become carbon neutral society by 2050. Since 2013, Nippon has been preparing to reduce carbon emission and in December 2020 pledged to achieve net-zero emission by 2050 and implement a decarbonization drive that could raise the operating cost of its blast furnaces.

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