Nippon Steel may cut more blast furnaces to reduce costs

Japan's top steelmaker Nippon Steel Corp may close more blast furnaces as part of plans to reduce domestic facilities to cut costs, said a senior executive, as falling demand and lower Asian steel prices eat into its annual profit forecast.

The world's third-biggest steelmaker has 15 blast furnaces across Japan with two due to be shut by around March 2024. Any further closures would reduce capacity and could undermine its presence in the growing, but highly-competitive Asian markets.

"Our goal is to bring down fixed cost to a proper level. All of the facilities including blast furnaces are possible targets of consolidations, but nothing has been decided yet," Nippon Steel Executive Vice President Katsuhiro Miyamoto said last Friday, citing that they need to mirror declining local demand due to shrinking population and higher export barriers amid growing trade conflicts worldwide.

Nippon exports more than 40% of its steel output, but the number may fall as Asian countries are seeking to increase local productions and China may ship more steel abroad from their newly-built mills by the coast, he said.

Last month, the steelmaker trimmed its annual profit forecast as slumping steel prices in Asia dented its export margins and a series of suspensions at local facilities, caused by a strong typhoon and a fire, cut its output. It also announced a restructuring plan at the time to consolidate its 16 domestic bases into six steelworks that will be under the direct control of its president from next April although details were not disclosed.

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