UPDATE 1-Nippon Steel Sumitomo to close blast furnace -Nikkei

Mon Mar 11, 2013 8:45pm EDT

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TOKYO, March 12 (Reuters) - Nippon Steel & Sumitomo Metal Corp, the world's No.2 steelmaker by output, will close the oldest of three blast furnaces at its largest steel mill in Kimitsu, east of Tokyo, within the next several years to cut excess capacity, the Nikkei business daily said on Tuesday.

That would mark the first crude steel capacity cutback since the company was formed by a merger of two Japanese steel majors last October.

The steelmaker will also delay the startup of a new blast furnace, with annual capacity of around 700,000 tonnes, at its Wakayama steel mill in western Japan from the original plan for end-March, as it does not expect a rise in demand, the report added.

The company is due to announce a mid-term business plan later this week. The Nikkei said the retrenchment plans would be included in that announcement.

Japan's steel industry has been hit by falling demand from carmakers and manufacturers that have shifted production overseas, as well as by the construction of new steel mills elsewhere in Asia and slowing economic growth in China, prompting steelmakers to cut output.

Nippon Steel & Sumitomo, which was created through Nippon Steel's acquisition of Sumitomo Metal Industries, did not have an immediate comment on the report.

Shuttering the oldest No.3 blast furnace at the Kimitsu mill in Chiba Prefecture will cut the company's crude steel production capacity by about 7 percent, the Nikkei said.

The company's crude steel output is estimated to be around 43.5 million tonnes in the year ending on March 31, down 8 percent from the steelmakers' combined peak output in 2007/08, the report said.

The Nikkei's estimate is less than the company's February projection of 45.9 million tonnes. (Reporting by Osamu Tsukimori; Editing by Richard Pullin and Edmund Klamann)

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