Japan’s Nippon Steel Eyes Increase in its Crude Steel Output in FY20

Nippon Steel, the world’s third largest steel manufacturer has set a target to raise its crude steel output to 11 MnT per quarter in the fiscal year starting from 1 April 2019. The average of estimated quarterly output for the ongoing financial year 2019 comes in at 10.3 MnT.

The company has been trying to boost its steel production over the past few years but is falling short due to the disruptions in production cycle amid natural calamities and lower qualities of raw material. In fact because of these troubles, Nippon Steel has lowered its annual crude steel output forecasts for the ongoing fiscal year of 2019 (to be ended in March) by 2% y-o-y basis from 42.1 MnT in FY18 to 41.3 MnT in FY19.

According to the company’s management, the technical troubles at its mills were due to mixed factors that includes lower quality of raw materials, ageing facilities, and heavier strain on its systems in processing harder and more advanced products such as high tensile steels. Now in order to fix these problems, Nippon Steel has started conducting routine maintenance more often and has also commenced a new blast furnace in Wakayama this month, replacing a 31-year-old blast furnace, which had been the world's oldest blast furnace in operation.

The positive steel demand outlook in Japan

Japanese steelmakers are enjoying solid domestic demand from automakers and the construction sector, which is busy with projects for the 2020 Tokyo Olympics. But natural disasters and glitches have prevented them from producing as much steel as they had planned.

In January 2019, Japan Iron and Steel Federation (JISF) head has also made a forecast that the country’s crude steel output is likely to increase in 2019, amid strong local demand from construction segment ahead of the 2020 Tokyo Olympics and in the absence of major impact from natural disasters. The nation's crude steel output slipped 0.3% to a nine-year low in 2018, as a string of natural disasters and glitches at steel plants led to slower production. The drop in output pushed Japan's ranking to the world's third-biggest producer - after China and India.