Posted on 23 Mar 2021
A fire at a major Japanese semi-conductor maker last Friday may largely impact the semi-conductor supply to the domestic automakers, and which may affect the steel market sentiment as a ripple effect, industry sources shared on March 22.
The fire at Renesas Electronics Corp’s Naka plant in Ibaraki prefecture in eastern Japan was reported at around 2:47am on March 19, and it took about five and a half hours to put out, with some chip production facilities confirmed damaged. About two-thirds of the semi-conductors produced at the suspended plant are to supply the domestic automakers, according to the company.
“We will continue to fulfil the signed orders for about a month with stocks and products from the other plants, and we will try to restart the plant within a month, but it will very much depend on how soon the devices can be replaced,” president of the company said at an online conference on March 21, and “this may have a serious impact on semi-conductor supplies to the automakers,” he warned.
The latest accident at Renesas may dent the hope among the Japanese automakers that the constraint in chip supplies may be eased by early summer, according to a Tokyo-based auto sheet trader.
“The Japanese automakers have been struggling with a global semi-conductor shortage since early this year and they had hoped for a solution by early summer, now the situation has deteriorated instead, as Renesas is the largest chip supplier to them, and they may be forced to revise their auto production plan downward,” he shared the concern.
An official from Toyota Motor’s public relations told Mysteel Global on Monday morning that the company is assessing the impact of the fire at Renesas, admitting that the shortage of semi-conductor has been a big concern for the company.
“One of our plants in Europe has been halted temporarily because of the delay in semi-conductors supplies from the U.S with the terrible cold wave in February, the others that are operating have been under the consistent fear for chip shortage,” she shared.
A second Tokyo-based auto sheet trader warned that the chip shortage might be far more serious than expected, and more challenging than Renesas’ previous suspension in 2011.
“I remember that it took about half a year to return to normal production after the suspension due to the Tohoku Earthquake (Great East Japan Earthquake) in March 2011, and this time the situation may be more challenging to the Japanese automakers, as they will find it hard to find alternative suppliers amid the global shortage of semi-conductors, and in the end, they may have to trim production and their steel consumption,” he said.
A sheet sales official from an integrated steel mill in Tokyo shared that auto sector has been leading the revival in Japan’s steel demand, and “if they have to cut down on production because of chip shortage, it will largely impact our steel production, and we need to watch closely the development,” he confirmed.
Japan’s domestic auto productions by eight major automakers in January totalled 653,058 units, down 10.1% on year and 9.1% lower on month, but the decline was temporary due to the heavy snow in January while domestic auto production had been steadily recovering, as reported.
In parallel, an earthquake at magnitude 6.9 that hit north Japan on Saturday evening, a month after the previous quake at the same area, though the Toyota official confirmed no damage or stoppage at Toyota’s plants in the area this time but it is checking on the impact on its auto parts suppliers.
Nippon Steel official confirmed that Kamaishi Area of East Nippon Works in Iwate prefecture, also in the area, has been operating as per normal after safety checks.
JFE Steel has resumed the operations on steelmaking and shipping facilities at its Sendai Works in Miyagi prefecture after a brief halt after the earthquake, but the safety checks on the rolling mills are still ongoing, a JFE official confirmed.
Source:Mysteel Global
