Japan’s second-largest steelmaker said yesterday it will shut down one of its blast furnaces from next month as global demand for steel plummets with the economic downturn.
Japan’s JFE Steel Corp said it was cutting production by nearly 26 percent in the second half of this fiscal year.
It decided to close the blast furnace in the western city of Kurashiki in the middle of next month after “comprehensively studying orders, production efficiency and cost,” a company statement said.
JFE Steel plans to cut crude steel output to 11.50 million tonnes in the second half of the year through March, down from 15.49 million tonnes in the first half, a company spokesman said.
The fall is steeper than the production cut of 1.5 million tonnes announced last month.
The blast furnace to be shut down is the company’s oldest and has been in operation for more than 18 years.
“The company will close it for now and put it through renovations, but we have not decided yet when to open the furnace,” the spokesman said.
The World Steel Association said last week that global steel production tumbled 19 percent last month from a year earlier, with North American output dropping steeply.
Steel demand — and prices — had been rising rapidly until the global economic crisis, led by soaring growth in China and other emerging economies.
In related news, China’s leading steel maker Baosteel (寶鋼) will raise prices of major products in February, the first hike since August amid the company’s confidence that demand is growing, state media reported yesterday.
Baosteel will increase the price of cold-rolled steel by 300 yuan (US$44) per tonne, the official China Securities Journal said, citing industry sources.
It did not provide the current price of cold-rolled steel, but data from Lange Steel Consulting firm showed it will mark a rise of 7 percent from next month’s average of 4,271 yuan per tonne for 1mm thick cold-rolled steel.
Baosteel has cut prices for major steel products four times since August because of weakening demand, the report said.
“The sudden reversal reflects that market confidence has steadily improved and panic selling has gradually disappeared,” Xu Xiangchun, a Beijing-based analyst with Mysteel Research, told the journal.
“In line with Baosteel’s move, other large steel mills like Anshan Steel will also consider raising product prices,” Xu said.
The report added, however, that other analysts argued the price rise did not necessarily signal a general recovery as global demand remained fragile amid spreading economic woes.
China’s steel industry recorded a combined loss in October, the first time in six years it has slipped into the red, earlier media reports said.