Japan: Nippon Steel mulls restarting blast furnaces over Oct-Mar

Nippon Steel, Japan's largest integrated mill, have been mulling the restart of two idled blast furnaces in the second half of fiscal 2020 (October 2020-March 2021) on noting the steady improvement in steel demand from the country's auto sector, a Nippon Steel official confirmed on September 4.

The company have so far halted six of its 16 blast furnaces across Japan in response to the weakened demand by the COVID-19 and the remaining Sino-U.S. trade tension since late last year, as reported.

Starting June, though, the demand of carbon and stainless steel from the Japanese auto manufacturers have been recovering steady and steel consumption will probably increase further, market sources said.

"We have been raising the capacity utilization rate at the running furnaces, but they may not be able to meet the growing demand later in the fiscal year, so we have been thinking whether to restart the idled furnaces and which one to resume operation first," the Nippon Steel official said, "and we will monitor the market situation closely before making the decision," she emphasized.

Special steel demand from Japan's auto sector has been recovering faster than the carbon steel, and Nippon Steel may restart the Muroran furnace first as the works is mainly for special steel production, it will not happen until by the end of November after the completion of the relining, she added.

No.2 blast furnace with inner volume of 2,902 cu m is the only blast furnace at Muroran Works in Hokkaido, which was banked on July 8 for the relining, and the Muroran plant produced about 1.5 million tonnes of crude steel during fiscal 2019 (April 2019-March 2020), or up 4.2% on year, as reported.

Nippon Steel's furnace restarting probably makes business sense, according to a Tokyo-based steel trader.

"The Japanese mills have been trimming output, leaving themselves with limited bandwidth for steel exports, but the overseas steel prices have been rebounding faster than Japan's domestic market, so they can make the best of the timing to increase their steel exports, another pro to reignite their furnaces," he said.

JFE Steel, Japan's second largest integrated mill, had restarted its No.4 furnace with inner volume 5,000 cu m at Fukuyama section of the West Japan Works on August 26, though the normal production will be achieved probably by the end of October, according to a company official.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.