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Nippon Steel sees about 400,000 mt production loss from plant stoppages

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Nippon Steel sees about 400,000 mt production loss from plant stoppages

Tokyo — Nippon Steel, Japan's largest integrated steelmaker, expects to lose about 400,000 mt of crude steel production in fiscal 2019 as a result of stoppages this year at its plants at Kimitsu Works near Tokyo, and Nippon Steel Nisshin's Kure Works in Hiroshima, the company confirmed Thursday.

The company's fiscal 2019 runs from April 2019 to March 2020.

Production at No.1 steelmaking plant with 150,000 mt/year capacity at Kimitsu was suspended after a chimney at its gas-treating facility collapsed due to Typhoon Faxai, which hit eastern Japan on September 9, S&P Global Platts reported previously.

A Nippon Steel spokeswoman said that the company expected the repair would be completed by end of December and the plant could restart from January.

"We have arranged alternative productions at other works such as Muroran Works, Kashima Works, Yawata Works and Wakayama Works, also asked other steel mills to support, but those supports wouldn't be able to cover all losses," she said. She also said total loss of finished steel product productions affected by the stoppage would reach around 340,000 mt in fiscal 2019.

Nippon Steel also forecast the loss from the stoppage of Kure No.2 steelmaking plant at its subsidiary Nippon Steel Nisshin to reach 100,000 mt over the same period.

Nisshin's Kure No.2 steelmaking plant has been closed due to a fire which occurred on August 30, S&P Global Platts previously reported. The company expected it would be difficult to restart before the end of current fiscal year.

The Nippon Steel spokeswoman said total production loss from Nisshin was expected to reach 450,000 mt but Nippon Steel would cover 280,000 mt for Nisshin, and 70,000 mt of stocks could be used, so the total loss would be around 100,000 mt.

"Our other works have been operating below full production levels so those could use available capacities to support Kimitsu and Kure," the spokeswoman said.

Meanwhile, the company expected the business impact loss -- which includes both volume loss and cost loss -- from Kimitsu Steelmaking stoppage to reach Yen 25 billion ($229.23 million), and those for Nisshin's Kure to be Yen 15 billion.

-- Yoko Manabe, yoko.manabe@spglobal.com

-- Edited by Kshitiz Goliya, kshitizgoliya@spglobal.com