Quake Damage, Power Short Move Japan Steel Output to West

Japanese steel industry’s production would shift to plants in eastern Japan to western plants when severe electricity shortage could continue longer period of time due to serious damage on Fukushima Daiichi Nuclear Power Station. Tokyo Electric Power Company (TEPCO)’s controlled blackout program impacts on production activity of steel industry and steel consuming sectors. Some of steel users already started to shift the production to western plants. The power shortage would get severer in summer time peak. Ministry of Economy, Trade and Industry expects the steel production will shift to western part of Japan when steel makers with plants in western Japan will adjust the production balance between the plants and makers with damage from the major earthquake should ask consignment production. Japanese steel makers try to utilize the domestic production capacity including group companies and alliance partners to keep stable supply for the users.

Nippon Steel contributes to the energy saving campaign by reducing operation rate for steel rolling and the downstream at Kimitsu works under the power shortage. The blackout program impacts on steel production around Tokyo when electric furnace steel makers and special steel makers around Tokyo revise the production schedule.

Japanese steel users already started to shift the part of the production to plants in western Japan. Fujitsu, which stopped operation of subsidiary in Fukushima due to damage form the quake, shifts the part of the production to other plants in Shimane and Ishikawa. An Osaka based special steel dealer with transaction with Honda Motor said Honda asked to the dealer to support for mold and heat treatment process for engine parts. Japanese steel users’ shift of parts procurement to western Japan would shift the steel consumption and supply to western Japan to optimize the logistics.

Japanese major steel makers started to shift the production from damaged works mainly to plants in western Japan due to healthy power supply. Nippon Steel shifts the production from Kamaishi works to Osaka based NS Bar and Wire and other plants. Nippon Steel & Sumikin Stainless Steel (NSSC) shifts the part of the production from Kashima plant to Hikari plant.

JFE Bars & Shapes asked to JFE Steel’s Kurashiki area of West Japan works for the production and tries to find chance to ask to other special steel makers in western Japan. Many plants of Japanese major integrated steel makers and special steel makers are located from Tokyo area to the western areas and the western plants would accept the alternative production.

TEPCO plans to stop the controlled blackout program temporarily in early May after the major holiday. The firm tries to secure 50 million kilowatt of power from restart of thermal power plant and from independent power producers. However, the firm should resume the blackout program when the power shortage would be 60 million kilowatt during summer. Japanese steel makers try to rebuild the production system to keep the supply chain when the steel users could increase offshore steel sourcing.