TOKYO, May 29 (Reuters) - Japanese Kobe Steel Ltd said on Wednesday it would shut a blast furnace and other upstream equipment at its Kobe Works plant in western Japan in the year starting April 2017 to turn around its loss-making iron and steel business.
Kobe Steel’s iron and steel operations posted an ordinary loss of 50.2 billion yen ($496.1 million) in the year to March 31, struggling against sluggish demand from shipbuilders and fierce competition from rivals such as South Korea’s Posco and China’s Baoshan Iron & Steel.
Domestic rival Nippon Steel & Sumitomo Metal Corp said in March it planned to mothball one of three blast furnaces at its Kimitsu steel mill in early 2016 and to delay the start of a new blast furnace at its Wakayama plant.
Kobe Steel expects to post 80 billion yen to 100 billion yen in ordinary income in 2015/16, including 30 billion yen from its steel business, Hiroya Kawasaki, the company president, told reporters.
The company expects to keep its domestic crude steel production capacity at 7 million tonnes, and sees domestic steel product demand at 50 million to 55 million tonnes in 2020/21, Kawasaki said, down from around 61 million tonnes now.
Kobe Steel said it will consider using the land at Kobe Works after shutting the blast furnace to pursue its power supply business. In February the company said it planned to build a 1.4 gigawatt gas-fired plant to sell power to Tokyo Electric Power Co.
$1 = 101.1850 Japanese yen Reporting by Yuka Obayashi, Writing by Osamu Tsukimori; Editing by Tom Hogue