Tokyo Steel Eyes 50% Production Cut in January-March

Tokyo Steel Manufacturing studies to expand the production cut to 50% in January-March from same period of 2008 compared with original plan of 20-30% cut. The firm sees the steel sales volume decreases by around 30% now from a year earlier level and expects the demand decreases more in January-March. The firm decided to stop new capital expenditure under slow demand worldwide while the firm keeps ongoing construction of new plant in Aichi.

The firm extends the downtime for yearend and New Year holiday and for regular maintenance to reduce the output. The firm stops usually the operations for 4 days in yearend and New Year holiday and for around a week in January for maintenance at the all plants in Fukuoka, Okayama, Kagawa and Tochigi. However, the firm considers 2-3 weeks of stoppage during maintenance when the demand decreases recently. The firm decides the stoppage period depending on the order receipt for January order.

The firm reduced the selling price by total 50,000 yen per tonne for H-beam and hot rolled coil in and after September. The firm tried to encourage the order and to compete with imports through the price reduction but the sales keeps low level. The firm tries to improve the supply balance by expanding the production cut while the production cost increases with lower volume.