JFE raising output in Q3 while NSSMC maintaining reduced rate

Japan’s two largest steelmakers, Nippon Steel & Sumitomo Metal Corp (NSSMC) and JFE Steel, are adopting opposing strategies for their crude steel output in the third quarter of 2015.

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While NSSMC will continue to operate at a reduced pace as it did in the April-June quarter, JFE Steel said its output will be higher in July-September on a quarter-on-quarter basis.

“Because of the inventory adjustment and the transition period of demand recovery [into] the second half of 2015, [JFE Steel’s] production rate will increase in the July-September period [compared with] April-June quarter,” a company official at Japan’s second-largest steelmaker told Steel First on Tuesday July 7.

NSSMC, however, “plans to continue the [crude steel output] reduction until the end of August”, a company spokeswoman confirmed to Steel First late on Monday July 6.

Japan’s largest steelmaker reduced its output by around 10% on a quarter-on-quarter basis in the three months to June in order to maintain a “stable supply-demand balance” amid a contraction in domestic demand following the increase in the country’s consumption tax in April last year.

The company’s spokeswoman noted that steel inventories in Japan remained high, which prompted NSSMC to extend its lower utilisation rate for a further two months.

“We expect to [see] good inventory levels from September [onwards],” she added.

Neither NSSMC nor JFE Steel, however, disclosed how much crude steel they produced in the April-June period and how much they were expecting to churn out in July-September.

Meanwhile, Japan’s ministry of economy, trade & industry (Meti) said it expected domestic crude steel output to increase by over 1% quarter-on-quarter over the July-September period.

Production is forecast to reach 26.18 million tonnes in the third quarter of 2015, up from an estimated 25.88 million tonnes in April-June, the ministry disclosed late on Friday July 3.

That forecast would represent a year-on-year drop of 6% compared with the 27.89 million tonnes produced in the third quarter of 2014, according to Meti.