TOKYO, Jan 31 (Reuters) - Nippon Steel Corp will likely cut about 10% of crude steel capacity by closing both blast furnaces at its Kure site “within a few years” to better compete in the face of rising output in top producer China, Nikkei business daily reported on Friday.
The move comes as Japan’s biggest steelmaker by output suffers weakening profit as slumping steel prices in Asia dent its export margins and after a series of suspensions at local facilities caused by typhoons and fires interrupted production.
Last month, a senior Nippon Steel executive said the firm may close more blast furnaces under plans to reduce domestic facilities and cut costs, as falling demand and lower Asian steel prices eat into profit.
The world’s third-biggest steelmaker plans to close two blast furnaces at Kure Works in western Hiroshima, operated by subsidiary Nippon Steel Nisshin, and may even shut down the entire steelworks including processing plants, the Nikkei said.
“The report is not based on our announcement,” Nippon Steel said in a statement.
“We are continuously considering measures to strengthen competitiveness of our steel business and we will announce any decisions when they are formalised,” it said, adding that no decisions have been made on the reported matter.
Nippon Steel has 15 blast furnaces across Japan, with an annual crude steel capacity of 52 million tonnes. It has already said it plans to close one of its two furnaces at Kure, western Japan, by around March 2024 as well as another at its Yawata Works in Kokura, Kyushu island, by March 2021.
Global crude steel production reached 1.87 billion tonnes last year, up 3.4% from 2018, showed data from the World Steel Association. Output from China, the world’s biggest producer and consumer of the alloy, climbed to a record just shy of 1 billion tonnes.
Reporting by Yuka Obayashi; Editing by Christopher Cushing