Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Japanese steelmaker Nippon Steel on Friday announced that in line with the recovery in the demand the company expects its losses to lower in the coming days. The steelmaker has also announced restarting of two blast furnaces before month-end that were shut due to a sharp drop in demand because of the pandemic. The steelmaker had reduced its capacity by 30pc, but the planned resumption will bring down its capacity cut to just 20pc, Davis learned from the company official release.


The company plans to resume production at its blast furnace at Kimitsu, eastern Japan and later this month at its Muroran blast furnace in northern Japan. The steel product inventories for hot-rolled, cold-rolled and surface-treated steel sheets have hit a 10-year low, if demand sustains then this will push the steelmaker to refire its other blast furnaces in the coming months. In the second half of the fiscal year, there will be 11 blast furnaces operational against nine furnaces at present.  



Nippon Steel’s crude steel output plunged 32pc to 14.64mn mt during H1 2020 (April-September) while it is expected to increase to 18.10mn mt in the second half the fiscal year.  

The company has raised its crude steel output target over this financial year (April 2020-March 2021) to 37.2mn mt on a consolidated basis, or 2.5pc higher than the original projection made on August 4 but still about 21pc lower year-on-year. The steelmaker has also lifted its capacity utilization to 80pc over the second half FY20 (October 2020-March 2021) from 60-70pc.  

The recovery in demand from the domestic auto sector has been faster than earlier expected.



The company has also lowered its forecast for a business loss to JPY60bn ($580mn) for this year, half of its August estimate of JPY120bn. Nippon Steel also predicted a net loss of JPY170bn in 2020, its second straight year of losses, after reporting a JPY191bn loss for the April-September half, the biggest red ink for the period since 2012.


The steelmaker would close its production line for heavy plate making in Nagoya in central Japan, one year ahead of scheduled closure while it will spend JPY35bn at its Hirohata plant, western Japan, to reinforce its electrical steel production, Davis Index 

reported earlier.  





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