Japan’s JFE Steel says it plans to idle some plate rolling capacity in response to weak demand. The announcement comes as the company reported shrinking profits in the first three quarters of the financial year started April 2019, Kallanish notes.
It says it aims to idle some plate mills at its East Japan Works in Kawasaki by the end of March. Further closures are expected at the Chiba area of the plant by March 2023. The company has yet to specify the capacity that could be lost as a result.
In financial 2019 JFE Steel now expects to produce 28.4 million tonnes of crude steel on a consolidated basis, up from 27.88mt the previous year. Over April-December 2019, crude steel output was down -2.54% year-on-year to 21.08mt. It expects finished steel shipments to be barely changed, however, at 28.3mt, compared with 23.78mt a year earlier.
In the first three financial quarters it shipped 17.38mt, down -5.03% y-o-y. It also expects a drop in average sales prices to JPY 79,000/t ($719/t) for the full financial year, from JPY 81,500/t a year earlier. January-March prices are expected to come in at JPY 76,000t.
As a result of the slowdown, it expects its steel segment to contribute exactly nothing to its bottom line over the year, compared with a JPY 161.3 billion profit the previous year. After booking a profit of JPY 17.7 billion over April-September, it expects losses to total JPY 17.7 billion over October-March.
In April-December it saw its steel sector earn a profit of JPY 11.3 billion, down from JPY 163.2 billion a year earlier. That was on revenue of JPY 2.006 trillion, down -6.64% year-on-year. The company as a whole saw revenue drop -3.43% y-o-y to JPY 2.792 trillion. Net attributable profit slumped -82.8% to JPY 26.9 billion.