JFE Steel, Japan’s second largest steelmaker, will temporarily shut down two blast furnaces due to low steel demand brought on by COVID-19.
JFE will shut down a blast furnace in Kurashiki by the end of April and the other blast furnace, located in Fukuyama, will be halted by the end of June, according to media reports. The company initially pondered the move on April 8, when the Japanese government announced a state of emergency.
The company hasn’t provided restart dates but, according to reports, may potentially resume operations upon short notice. The stoppages will cut production capacity by about 25pc, or 7mn mt of crude steel, based on yearly output.
JFE’s sales, earnings, and cash flow generation have been challenged since the pandemic led to an economic downturn, subsequent to lowered demand from steel consuming customers such as automakers and others in the manufacturing industry.
Similar actions were recently taken by competitor, Nippon Steel as part of a string of output cuts across industries that have been financially affected by the pandemic.
The company, owned by JFE Holdings and headquartered in Tokyo, Japan, produces sheet, plate, pipe and tube, stainless and specialty steel, electrical steel, bar and wire rod, shapes and iron powders.
JFE, employing around 44,975 workers, has not taken a similar move since 2009 when financial adversity impacted global steel demand.