Nakayama Steel Works to Shutdown Converter, Coke Oven

Nakayama Steel Works announced on Wednesday the firm stops operation of converter, coke oven and power generator in June 2010 to improve the profitability. The firm also reduces the job by more than 200 or more than 20% to 700 employees. The firm targets to post consolidated recurring profit for fiscal 2010 ending March 2011 through the restructuring.

The firm improves the profitability enough to make money even with monthly 100,000 tonnes of sales volume, which represents 70% of the sales in April-September 2008. The firm posts 10 billion yen of restructuring charge. The firm revised the profit outlook downward to 19 billion yen of consolidated net loss for the first half of fiscal 2009 and 20 billion yen of net loss for the full year from previous outlook with 8 billion yen and 2 billion yen loss respectively as of August.

The firm decided the shutdown of the converter or Nakayama Scrap melting and Refining process (NSR) when the operation is only monthly 20,000 tonnes compared with peak of 35,000 tonnes. The firm focuses on the electric furnace steel making to make slab for hot rolling operation while the firm purchases steel sources for bar and wire rod production from Nippon Steel and other steel makers. The firm also decided the shutdown of the old coke oven while the firm produces annual 300,000 tonnes of coke to sell third party.

The firm started the cost cutting program including 10% pay cut for management and monthly 2-3 days of temporary closing at plant and offices earlier the year. However, the firm couldn’t make money through every month in the first half year of fiscal 2009.