Nippon Steel to Double Planned Cuts to Production

Nov. 25 -- Nippon Steel Corp., the world's second-largest maker of the metal, will double planned production cuts because of waning demand from carmakers and builders.

The company plans to lower output by about 2 million to 2.2 million metric tons in the six months to March 31, compared with the first-half, Nippon Steel President Shoji Muneoka said today at a meeting of the Japan Iron & Steel Federation, which he chairs. The company on Oct. 29 estimated cuts of 1 million tons.

Nippon Steel and rivals are reducing production because of falling demand. China Steel Corp., Taiwan's largest mill, said today it plans to cut output by about 10 percent next year as economic growth slows. Global market turmoil has pushed countries from Europe to the U.S. and Japan into recession.

"The financial crisis has started to affect the real economies," Muneoka said. "If steel demand gets worse, we may have to increase production cuts."

Japan's crude steel output fell 2.7 percent in October from a year earlier, the first drop in 29 months, the country's iron & steel federation said in a statement on Nov. 19. Tokyo-based JFE Holdings Inc., the world's third-largest maker, said last week it will deepen second-half cuts by threefold to 1.5 million tons.

Nippon Steel's second-half output cuts represent 12 percent of its first-half production of 16.57 million tons on a parent- company basis, excluding subsidiaries and affiliates.

Auto Demand

Carmakers are cutting output as the global recession cripples demand. Toyota Motor Corp., Japan's largest automaker, said Nov. 21 it will cut its domestic temporary workforce by 50 percent. The company's U.S. sales plunged 23 percent last month.

Nippon Steel advanced 5.2 percent to 284 yen on the Tokyo Stock Exchange while the Nikkei 225 Stock Average also rose 5.2 percent on speculation a U.S. government rescue of Citigroup Inc. will calm credit market turmoil and foster lending growth. The shares are still down 59 percent this year.

Japan's exports, the main engine of the nation's economic growth in the past six years, fell 7.7 percent in October from a year earlier, the biggest drop since December 2001, the Finance Ministry said Nov. 20.