An Aging Population, Other Market Challenges Force JFE Steel to Resize
In a statement, JFE said it will shutter the ironmaking, steelmaking and hot rolling equipment at the East Japan Works’ Keihin District plant of over the next four years, reducing crude steel capacity by around 4 million metric tons, or about 13%.
Steel sheet production, excluding pickled sheet special steel, will be consolidated in the Chiba District plant.
“Chiba will continue to function as an integrated blast furnace production base in East Japan to manufacture primarily automotive steel sheet, which is one of our priority fields, as well as stainless steel and iron powder. In conjunction, (the No. 6 blast furnace) will be refitted by 2023 or thereabouts,” the company said.
JFE Steel executives said the company is taking the step in response to a difficult market and demographic shifts in Japan.
“JFE Steel is facing an unprecedented and extremely challenging operating environment, particularly a slump in steel demand among manufacturing industries due to U.S.‐China trade tensions, rising raw material prices driven by China’s increased output of crude steel, and rising prices for various commodities and services including auxiliary raw materials, other materials used in production, and logistics,” the company said.
“Additionally, over the medium to long term, demand in the Japanese market is expected to decline amid population decline and other factors, while overseas markets will present increasingly intense competition due to expanding steel production capacity in developing economies and the growth of Chinese exports due to falling domestic demand in that country.”