Kobe Steel Expands Raw Steel Production Cut

Kobe Steel expands raw steel production cut to 1.05 million tonnes in October-March period from 600,000 tonnes as of December compared with April-September. The firm reduces the production to 1.3 million tonnes in January-March, which is 36% lower than same period of 2008 and by 29% from October-December, when the demand for high valued steel products decreases for automobile and other manufacturers at higher pace than expected.

The raw steel production decreases to 3.13 million tonnes in October-March period, which is 25%b lower than April-September. The annual production decreases by 9.4% to 7.31 million tonnes in fiscal 2008 ending March 2009 from fiscal 2007.

The raw steel production increased by 2% to 4.18 million tonnes in April-September from same period of 2007. The production was higher pace than fiscal 2007, when the production hit record 8.07 million tonnes. However, the industrial activity started to slow in October after US financial crisis.

The firm announced in October the production would decrease by 200,000 tonnes in October-March from April-September. The firm expanded the production cut to 600,000 tonnes in December when the demand of flat steel and wire rod was expected to decrease for automobile, appliances and industrial and construction machinery. The firm decided to expand the production cut to 1.05 million tonnes when the manufacturers’ activity keep slowing in January and the steel users try to reduce the inventory.

The raw steel production decreases to 1.3 million tonnes in January-March from 1.83 million tonnes in October-December. The quarterly production is the lowest level after 1.27 million tonnes in January-March 1994, except for earthquake damage in 1995.

The firm keeps the blast furnace operations for 2 furnaces with 5,400 cubic meters of capacity and 4,500 cubic meters capacity at Kakogawa works and a furnace with 2,112 cubic meters of capacity at Kobe works. The firm reduces the operating rate of the furnaces while the firm increases the temporally blowing stoppage time to reduce production. The firm also reduces raw steel production by reducing ferrous scrap consumption at the steel making shop.

The firm plans 1 million tonnes of sales volume in January-March, which is 50% lower than 1.67 million tonnes in October-December.