Apr 17, 2020
Japan expands state of emergency nationwide, steel mills cut output further

On Thursday, April 16, Japan’s prime minister Shinzo Abe declared a nationwide state of emergency in Japan to contain the spread of covid-19. From April 8, a state of emergency had been announced in Tokyo, Osaka and five prefectures.

A nationwide state of emergency will cover all 47 prefectures in the country and will last until May 6. “We will minimize the movement of people during the long holiday break,” the prime minister said. The Golden Week will start on April 29 and will end on May 6. Japan confirmed 503 new Covid-19 cases in 24 hours today, April 17, and the total number of infections reached 9,167, according to the Ministry of Health.

Steel mills in Japan have already been hit by lower construction steel demand and closures of carmaking plants and consumption is expected to remain reduced in the near future. Today, a source from the largest Japanese manufacturer Nippon Steel said that the company plans to halt its blast furnace at the Kimits plant in eastern Japan. On April 7, Nippon Steel announced that it would temporarily stop its blast furnace No. 1 at the East Nippon Works’ Kashima area as of the middle of April and blast furnace No. 1 at the Kansai Works’ Wakayama area as of late April, as SteelOrbis reported earlier. Though the company is not giving details of what exact steel product output will be affected, most sources believe the cuts are mostly aimed at billet and longs and HRC production. Some Japanese insiders said that at the moment the total output of Nippon Steel has already been reduced by 20 percent and a further reduction of at least 10 percent is expected.

This week, JFE Steel Corporation has announced that it will halt two blast furnaces at its West Japan Works due to lower steel demand in both domestic and overseas markets. For the two major steelmakers in Japan, the domestic market accounts for 60 percent, while export sales are about 40 percent of total shipments.

Along with the slowdown of the steel consumption in the Japanese market, collection of scrap has also declined. Shindachi material has been affected the most, as its production depends on the automotive industry. Market sources told SteelOrbis that shindachi supply volumes have fallen by 50 percent in April. Japanese H2 scrap collection has not been hit so hard, but it has already been reduced. Redirection of some volumes from the local market to exports has somewhat offset the decline. “We think that it is a very positive sign that Japan has imposed a national state of emergency. It is very important how Japan will deal with the virus spread. If they cannot control it, we will face a serious scrap supply issue and it will be a disaster,” one Asian importer of Japanese scrap told SteelOrbis.

Source: Steel News