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Materials

Nippon Steel to restart blast furnace on car and appliance demand

Exclusive: Japanese crude steel capacity to return to 90% of pre-pandemic level

A hot steel slab heads to the rollers at Nippon Steel's Kimitsu works in 2018. (Photo by Kotaro Igarashi)

TOKYO -- Top Japanese steelmaker Nippon Steel plans to fire up an idled blast furnace again by the end of the year in response to rising orders from the domestic automobile and consumer electronics industries, Nikkei has learned.

The group looks to restart the No. 2 blast furnace at the Kimitsu works in Chiba Prefecture, across Tokyo Bay from Yokohama. The unit was idled in June because of a sudden drop in steel demand as a consequence of the coronavirus pandemic.

Nippon Steel's move to bring capacity back online follows the restart of a blast furnace last month by domestic peer JFE Steel. A resumption by Nippon Steel will restore Japan's crude steel capacity to roughly 90% of pre-coronavirus levels.

Demand from domestic customers is recovering, mostly in the auto industry. Nippon Steel is moving forward with preparations for a restart by the end of the year, but it could begin at an earlier date depending on order trends. 

Japanese steelmakers have suspended blast furnaces since April. Six out of Nippon Steel's 15 domestic units are idled, including those that had previously scheduled repair work pushed up. The closure of the Kimitsu blast furnace affected roughly 3,500 jobs.

Nippon Steel's Kimitsu works sits across Tokyo Bay from Yokohama.

JFE Steel halted the No. 4 blast furnace in Hiroshima Prefecture, one of eight Japanese units in its group. The company had planned to restart the furnace this month, but pushed the date forward to mid-September in response to a rebound in orders from the auto industry. One JFE Steel blast furnace is currently idled.

Overseas consumption is a major driver in the recovery in steel demand. In the auto industry, Japanese plants operated at full capacity in September due to the jump in exports to China and the U.S.

At Toyota Motor, this month's domestic production "is expected to operate at levels exceeding initial plans," said a representative at the automaker.

Japan produced 6.44 million tons of crude steel in August, according to the Japan Iron and Steel Federation, down 20.6% from a year earlier. Steel output has underperformed year-earlier volumes for six consecutive months, though the decline has narrowed.

Both Nippon Steel and JFE Steel plan to step up crude steel output by 2 million tons each during the fiscal second half through March 2021 compared with the first half.

International rivals have been restarting blast furnaces as well. In late August, Brazil's Usiminas relit a furnace that has been suspended since April. European giant ArcelorMittal resumed operations at a French unit, and U.S. Steel relaunched three blast furnaces.

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