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Energy

Nippon Steel cuts full-year loss forecast, automaker demand picks up

FILE PHOTO: A production line of Nippon Steel & Sumitomo Metal Corp.'s Kimitsu steel plant is pictured in Kimitsu, Chiba Prefecture, Japan, May 31, 2018. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) - Japan's biggest steelmaker Nippon Steel Corp 5401.T on Friday halved its business loss forecast for the year to March 31 and raised its annual crude steel output plan, helped by strong recovery in steel demand from automakers.

The world’s No.3 steelmaker now expects a business loss of 60 billion yen ($580 million) for this year, down from its August estimate of 120 billion yen.

“Demand from automakers is in a steady recovery from the COVID-19 crisis although an appetite for capital expenditure by smaller companies has receded,” Nippon Steel Executive Vice President Katsuhiro Miyamoto told a news conference.

The company also raised its annual crude steel output forecast to 32.7 million tonnes on a parent basis from 31.8 million tonnes, as a blast furnace in Kimitsu, eastern Japan would resume, as would another in Muroran in northern Japan, later this month.

To cope with collapsing demand amid the pandemic, Nippon Steel temporarily shut several blast furnaces earlier this year, reducing capacity by 30%, but the planned resumption will trim the capacity cut to 20%, Miyamoto said.

The steelmaker plans to sequentially resume other blast furnaces as demand picks up further, he said, pointing to inventories of hot-rolled, cold-rolled and surface-treated steel sheets at their 10-year lows.

As part of its restructuring, it will hasten the planned closure of production lines for heavy plate in Nagoya in central Japan by one year while spending 35 billion yen in its Hirohata plant, western Japan, to reinforce its electrical steel production.

Nippon Steel also predicted a net loss of 170 billion yen for this year, its second straight year of losses, after reporting a 191 billion yen loss for the April-September half, the biggest red ink for the period since 2012.

Its crude steel output plunged 32% to 14.64 million tonnes.

Reporting by Yuka Obayashi; editing by David Evans

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