Nippon Steel cuts FY 2021-22 crude steel forecast for second time by 2%

Japan's Nippon Steel downgraded its projected consolidated crude steel production for the financial year ending March 31, 2022, to 44.80 million mt, down 2% from the 45.70 million mt it forecast Nov. 2, 2021, the steelmaker said Feb. 3. This was the second cut from an initial 46 million mt predicted in May 2021.

The lower revision came after the steelmaker saw its crude steel output for October to December 2021 fall 2.7% to 11.06 million mt from 11.37 million mt quarter on quarter.

It also projected its final FY 2021-22 quarter's production to fall further by about 10.60 million mt in January to March.

Nippon Steel attributed the lowered forecast to lesser steel demand from China since the second half of 2021, and it also assumed that this would continue in 2022 under strong policy controls for carbon emissions. Another contributing factor stated was the drop in steel demand from the automotive industry as it continued to grapple semiconductor chip shortages.

It forecast that Japan's domestic vehicle production might only hit 7.7 million units for the financial year ending March 31, which was 6.1% short from the 8.2 million units previously forecast on Nov. 2, 2021.

Even Japan's automotive producing giant, Toyota Motor Corp., was also seen unlikely to be able to hit its production target of 9 million vehicles for the current fiscal year, as it was still scheduling plant shutdowns end-January and in the first half of February.

Despite the lower output, however, profits were still a boon for Nippon Steel as the company maintained it will post an annual net profit of Yen 520 billion ($4.54 billion), swinging from a net loss of Yen 32.4 billion the year before, citing higher prices of steel.

For the current FY, it expects steel prices to average Yen 117,000/mt, holding a 35.9% gain against its Yen 86,100/mt in the previous FY.

Expansion projects were also underway for the company as it sought to capture robust demand overseas. It expects to complete its stake purchases of two Thai steelmakers, G Steel and GJ Steel, by the end of February, at 49.99% and 49.90%, respectively, valued at $419 million. Upon completion, Nippon Steel will launch a tender offer for the remaining shares of G/GJ Steel, which are expected to cost about $344 million.

For its ArcelorMittal Nippon Steel India, or AM/NS India, joint venture, the Japanese steelmaker obtained permission from the Odisha government in December 2021 to set up an integrated steel plant at Kendrapara. Also, AM/NS signed a memorandum of understanding with the Gujarat government in January 2022 to invest in its Hazira steelworks, where it has plans to double the current output of 9.6 million mt/year.

In the US, it reiterated that a new 1.5 million mt/year electric arc furnace at its AM/NS Calvert venture in Alabama will be completed in the first half of FY 2022-23.

Within Japan, it expects to start up a new 60,000 mt/month EAF at its Setouchi Works during the first half of 2022 to feed three electrical steel sheet plants. The first and second Setouchi plants are expected to be running from first-half 2023 while the third is due to come online first-half 2024.