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JFE to cut 13% steel capacity by March 2024, predicts record loss

Logo of JFE Holdings Inc is seen at Keihin industrial zone in Kawasaki

TOKYO (Reuters) - JFE Holdings Inc, Japan's second-biggest steelmaker, said on Friday it would cut its steel capacity by 13% by shutting a blast furnace by March 2024 due to weakening demand from manufacturers hit by the U.S.-China trade war.

"We are facing an unprecedented and extremely challenging operating environment due to slumping steel demand from manufacturing industries hit by the U.S.-China trade war and rising prices of raw materials driven by China's increased output of steel," JFE Steel President Yoshihisa Kitano told a news conference.

The company forecast an impairment loss of about 220 billion yen ($2 billion) on its production facilities in Chiba and Kawasaki, near Tokyo, in the current business year ending this month.

As a result, the steelmaker slashed its full-year earnings forecast, predicting a record 190 billion yen ($1.75 billion) in net loss, compared with its prior estimate of a net profit of 13 billion yen.

Under the restructuring plans, it will close a blast furnace and other facilities at the East Japan Works (Keihin) in Kawasaki in the year that ends March 2024.

Japanese steelmakers are also facing waning domestic demand due to a decline in population.

Last year, crude steel output in Japan, the world's third-biggest steel producer, fell 4.8% to 99.28 million tonnes from a year earlier, edging below 100 million tonnes for the first time in 10 years, the Japan Iron and Steel Federation said.

In February, Nippon Steel Corp unveiled a plan to shut nearly 10% of its production capacity, an unprecedented move in the once-dominant Japanese steel industry hit by falling demand at home and competition from China.

($1 = 108.8100 yen)


(Reporting by Yuka Obayashi; Editing by Shri Navaratnam and Subhranshu Sahu)