Kobe Steel mulls blast furnace shutdown to stave off overseas rivals

Kobe Steel is planning to suspend a blast furnace at its Kobe works in Japan as it struggles to cope with increasing competition from South Korean and Chinese rivals, according to local media.

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The suspension will be incorporated in a medium-term business plan which will be announced by the company later this month, according to a report in The Nikkei Business Daily.

The steelmaker intends to consolidate furnace operations into its Kakogawa works, where output will be raised to offset the loss of production at the Kobe works, according to the report.

However, a company official told Steel First that the fate of the Kobe blast furnace was still uncertain. “We are studying plans but as yet absolutely nothing has yet been decided and we cannot say when they might be,” he said.

The Kobe facility, which opened in 1959, is responsible for producing about one million tpy of steel, making it the smallest of the company’s three blast furnaces. Output accounts for about 18% of Kobe Steel’s overall steel production.

The move is aimed at improving profitability of its steelmaking operations by reducing production costs after the company posted a second year of losses.

Its mainstay steel business posted a pre-tax loss of Y50.2 billion ($493 million) in the year ended March 2013.

Nippon Steel & Sumitomo Metal Corp has already announced plans to close one of its three blast furnaces at its Kimitsu works in Chiba Prefecture by the end of March 2016. The company will also delay the start of a new blast furnace at its Wakayama plant.

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