Nippon Steel production level has probably bottomed Japan

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

27 Feb 2009

Nippon Steel Corp., the world’s second-largest producer of the metal, said production has probably bottomed as customers including automakers and machinery makers shed excess inventories. “Output levels are unlikely to drop further than the January to March quarter,” Executive Vice President Kiichiro Masuda said today in an interview in Tokyo. Stockpile reductions by customers, even as demand remained weak, would lead to a recovery in production that may begin as early as next quarter, he said.
Toyota Motor Corp., the world’s largest carmaker and a Nippon Steel customer, said last week domestic production will rise in May from April as it adds new models. Japan’s crude steel output will drop 32 percent from a year earlier to a 39-year low of 21.1 million metric tons in the quarter ending March 31, the Ministry of Economy, Trade and Industry forecast on Dec. 25.
Production would be in line with the government estimate and may “slightly” recover in the April to June quarter, Shoji Muneoka, chairman of the Japan Iron & Steel Federation, said later today at a media conference. Muneoka is also president of Tokyo-based Nippon Steel.
Japan’s crude steel output may be about 100 million tons in the year starting April 1, less than the 109 million tons forecast for the current year, he said.
Nippon Steel gained 0.8 percent to 246 yen on the Tokyo Stock Exchange. The benchmark Nikkei 225 Stock Average advanced 2.7 percent to 7,461.22.
Output Forecast
The company is on track to produce 5 million tons of crude steel in the quarter ended March 31, matching a Jan. 29 forecast, Masuda said. That would be 41 percent lower than a year earlier.
Nippon Steel and its four domestic blast-furnace mill rivals all forecast fourth-quarter losses. Luxembourg-based ArcelorMittal, the world’s largest steelmaker, posted a loss in the past quarter.
Nippon Steel will maintain its mid-to-long term strategy on overseas expansion even as the recession curbs sales, Masuda said. The company plans to raise crude-steel capacity to 40 million tons from planned output of 28.9 million tons this fiscal year, he said, without giving a timeframe. The company didn’t rule out the possibility of making acquisitions to expand overseas.
Japan’s economy sank at an annual rate of 12.7 percent last quarter, the most since 1974, as recessions in the U.S. and Europe triggered a record drop in exports, the Cabinet Office reported Feb. 16.
Japan’s crude steel output slumped 38 percent in January to the lowest in 40 years, as a global recession slashed demand, the Japan Iron & Steel Federation said Feb. 18.
Domestic vehicle sales fell 28 percent in January, the biggest drop since May 1974, the Japan Automobile Dealers Association said Feb. 2.
Toyota, Honda Motor Co. and other Japanese carmakers may post at least a combined 20 percent drop in February local sales, the association said yesterday.

Source: Bloomberg