Reasons You Should Review Supply Chain of Japanese Steel

Dramatic restructuring is underway in Japanese steel mills
Dramatic restructuring is underway in Japanese steel mills

All Japanese steel companies are restructing their production (both products and operating plants) due to shrinking domestic market, severe competition with oversea steel companies, and reduction of carbon emissions.

This article introduces their production plant and product integrations as well as expected consequences.

The current restructing plans of Nippon Steel, JFE, Kobe Steel, and Hitachi Metals (orders by company size) are the followings.

This list describes both closing mills, affected products, and new investment or directions of each steel company.

  • Nippon Steel (No.5 in world steel ranking) Overall Nippon steel decreases total output for shrinking domestic market and improve its high-end products (Electrical steel sheet, High-tensile steet) quality, and start to produce oversea or localize steel instead of exporting from Japan.
  • Close a blast furnace in Kashima (Sheet, Plate, Pipe)
  • Sheet – Vehicle, Home Appliance
  • Plate – Shipbuilding, Bridge
  • Pipe – Construction
  • Close a blast furnace in Wakayama (Seamless pipe)
  • Seamless pipe – Oil well pipe
  • Close all two blast furnaces in Kure (Sheet Steel)
  • Sheet Steel – Vehicle components (Galvanize, Galvalume, and Tinplate)
  • Close a blast furnace in Yawata (Bar, Wire)
  • Round bar – Hot forging, Frange, Gear
  • Deformed bar – Construction
  • Square bar – Structure Material, Vehicle components, Machinery components
  • Flat bar – Leaf spring, Vehicle components
  • Round bar – Vehicle components, Machinery components
  • Wire – Cold forging, Cold drawing
  • Semifinished Wire – Vehicle components, Machinery components
  • Bar in coil – Cold forging, Cold drwaing
  • Prestressed concrete steel bar – Concrete
  • Open a new Hot Roll line in Nagoya
  • Update Electrical steel sheet in Yawata
  • Aquired two Thai Electrical furnace mills (G steel and GJ stell)
  • JFE (No.14 in world steel ranking) JFE also decreases total output for shrinking domestic market and improve its high-end products (Electrical steel sheet, High-tensile steet, Offshore wind power steel) quality, and divisify its income source from Plant engineering business.
  • Close a blast furnace in Keihin (Sheet, Plate, Pipe)
  • Sheet – Electrical appliance, Vehicle components, Construction
  • Plate – Shipbuilding, Bridge, Construction, Large pressure vessel
  • Pipe – Boiler, Nuclear pipe, Oil well pipe
  • Aquired a German urban environmental engineering company
  • Kobe Steel Kobe steel also decreases total output for shrinking domestic market, had quality inspection data falsification, invest other than steel business. Kobe steel is one of many business units of Kobelco. Kobe steel is rumored to integrate with other steel company.
  • Close a blast furnace in Kobe (Wire, Bar)
  • Wire – Vehicle components, Pressed concrete, Cold forging
  • Bar – Cold forging, Machine Structure
  • Aquired a Swedish Isotropic pressure pressurizing device company
  • Hitachi Metals Hitachi Metals does not decrease steel output yet, American investment fund is acquiring Hitachi Metals. Its restructing plan is yet to come.

There are 3 expected consequence of Japanese steel mills restructing.

  • Some steel grades of small production quantity become less stable supply or perhaps completely discontinued. Especially less profitable steel grades due to low yields or over competition can be a subject of less stable supply.
  • Steel prices in Japanese market are expected to rise besides current world-wide inflation.
  • By-products of steel production are expeceted to decrease. Examples of by-products are secondary steel (Roll-over steel or some left over steel) and industrial gases (gas produced from Blast furnaces).

Counter-measurement is simply to procure from outside Japan. Equivalent steel grades can be found from non-Japanese steel mills. Still evaluation test is a must since characteristic of a steel grade differs by each steel mills. Enserve is currently working on stable supply of precision strip steel. It requires a lot of research to match specifications of clients. Enserve is looking for reroller partners and other processing partners to help replace these Japanese steel steels.

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