Kobe Steel Triples Production Cut in 2H

Kobe Steel will expand the raw steel output reduction to more than 600,000 tonnes in the second half year to March 2009 from the first half to meet slower demand for high valued steel including automotive applications while the firm announced 200,000 tonnes of production cut before. Japanese major steel makers expand the production cut under slower steel demand when Nippon Steel announced more than 2 million tonnes of output reduction and JFE Steel expand the production cut to 1.5 million tonnes.

Kobe Steel’s raw steel output will decrease to around 3.58 million tonnes in the second half from 4.18 million tonnes in the first half. The full year output will decrease to 7.76 million tonnes from 8.07 million tonnes in fiscal 2007. The firm decided the additional production cut when the steel demand decreases more for automobile, appliances and construction machinery.

Nippon Steel and JFE Steel already announced wider production cut for second half from the first half compared with earlier announcement at 1 million tonnes and 500,000 tonnes respectively. Sumitomo Metal Industries and Nisshin Steel revise the production plan while they already announced output reduction at 100,000 tonnes and 140,000 tonnes respectively.

The major steels eye further output reduction depending on the market. The major 5 steels’ raw steel output could decrease by around 10% or 5 million tonnes in the second half from 45.32 million tonnes in the first half.