JFE Steel to Reduce Dealers’ Plate Stock Level by Production Cut

JFE Steel keeps plate steel production cut for distributors, construction machinery and industrial machinery to reduce the overstock. The firm keeps reducing the production at less than the actual demand level in July-September when the firm expects the demand keeps slow. The firm tries to improve the supply balance expecting completion of inventory adjustment by end of September. The firm expects the inventory at customers of shearing processors and distributors will decrease from current near 3 months of shipment to around 1.5 months.

Japanese plate demand decreases especially for machinery and building applications. JFE Steel expects the order receipt from distributors decreases by 80-90% for April-September from same period of 2008 and the order from machinery could decrease by 80-90% or more.

Under slower demand, plate inventory at distributors and processors. Japanese processors’ inventory was 2.9 months of the shipment at end of May, according to Japan Steel Plate Shearing Industrial Guild. The stock decreased to 513,000 tonnes from the peak of 551,000 tonnes in March while the shipment was as low as 175,000 tonnes in May. The stock is much higher than the decreasing shipment.

JFE Steel tries to reduce the inventory by rejecting orders except for filling stock out sizes since April-June period. The firm expands the stock adjustment approach when the demand could decrease more in machinery and building applications.