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Nippon Steel Sees Downside Risk as Coronavirus Spreads-The 21st China(Guangzhou)Int'l Stainless Steel Industry Exhibition
3/2/2020 - Stainless Steel Exhibition |
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Reuters reported that world’s No 3 steelmaker Nippon Steel is bracing for a downside risk as slower manufacturing activities in China in the wake of the coronavirus outbreak may further weigh on demand in industries such as auto and machineries. Nippon Steel Executive Vice President Mr Katsuhiro Miyamoto told Reuters in an interview last week“We have not cut our crude steel output but we need to be prepared for downside. Inventories held at steelmills in China rose 30% in early February from a year ago, with stockpiles at Nippon Steel’s steel joint venture in Shanghai also increasing due to transport disruptions. We may see wider impacts if industrial activity doesn’t pick up quickly in China.”
He added that steel demand in automobiles, industrial machineries and shipbuilding had been hit by softer global economy even before the outbreak.
Mr Miyamoto said that another worry is higher prices of raw materials, with coking coal prices being pressured by the border closure by Mongolia which supplies about 30% of the key steel-making ingredient to China.
Referring to April-Septembe, he said “We can’t tell how much impact we will have from the epidemic, but we expect a tough time through the first half of the next financial year.”
In February, Nippon Steel unveiled a plan to shut nearly 10% of its production capacity, an unprecedented move in the once-dominant Japanese steel industry hit by falling demand at home and competition from China. The planned closure of 4 blast furnaces will reduce its domestic annual crude steel output capacity by 5 million tonnes to 49 million tonnes. It forecast a record loss of JPY 440 billion (USD 4 billion) this financial year, due to massive impairment charges on its domestic plants.
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