Japan: JFE Steel to double its investment to increase electrical sheet capacity

JFE Steel, Japan's second-largest integrated steelmaker after Nippon Steel, plans to allocate another Yen 50 billion ($379 million) to add more capacity for non-grain-oriented (NGO) electrical steel sheets, a key ingredient in the cores of electric motors.

Back in April 2021, the company had announced that it was spending Yen 49 billion to build new facilities in the Kurashiki area of its West Japan Works that would double NGO capacity, with start-up targeted for during the first half of the fiscal year starting in April 2024, as Mysteel Global reported.

In the announcement, JFE is doubling its investment in the Kurashiki project to triple the plant's NGO capacity, with the additional expansion targeted to start during fiscal 2026 beginning April that year.

The Japanese mills regard silicon sheet as a strategic item and so never reveal their works' capacity, let alone production, Mysteel Global notes.

"The electrification of automobiles is accelerating amid the global push toward carbon neutrality," JFE said in the statement. "The demand for high-grade (NGO) sheet products used in drive motors of electric vehicles is expected to continue expanding in parallel with the further tightening of global environmental regulations," it observed.

Data from Japan Iron & Steel Federation (JISF) showed that production of silicon sheets - both NGO and grain-oriented (GO) sheets used in transformers - decreased slightly by 2.8% during 2022 to 1.35 million tonnes, though the dip could be seen as a correction after the huge 28% jump in 2021 to 1.39 million tonnes. More crucially, just under half of last year's output was exported, the JISF statistics showed, equivalent to 584,400 tonnes.

JFE's rival Nippon Steel is also actively spending in the area. In November 2020, the steelmaker announced it would allocate an extra Yen 35 billion to expand its electrical sheet production capacity by 40% (including both NGO and GO) at Yawata area of Kyushu Works and Hirohata area of Setouchi Works, taking the total investment to Yen 104 billion.

The work was be completed by April-September 2023, though last March, it announced an "upward adjustment" to its plan, eyeing lifting capacity by 50% and nudging back the competition target to April-September 2024, as reported.

"Japanese integrated mills know they cannot compete with overseas steel suppliers in prices for commodity grade products, so they are shifting their investment in high value-added products and especially for electrical sheets where demand is growing for sure," a Tokyo-based sheet trader observed at the time. "We expect major integrated mills to continue competing in this area," he remarked.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.