JFE Steel plans to cut more than 120 billion yen ($1 billion) in costs over a three-year period beginning in fiscal 2015 in effort to raise efficiency amid intensifying competition from Chinese rivals.
The Japanese steelmaker seeks to lower steel production costs by about 5% through updates to aging equipment. It will invest tens of billions of yen to replace coke-refining furnaces in Chiba and Okayama prefectures that are over 40 years old with new ones by 2016.
The new furnaces will deliver stable output even when cheap coal is used, thus curbing material costs and improving productivity.
At the Chiba site this summer, the company will invest some 20 billion yen to update power-generating equipment as well. The equipment, which supplies electricity to steelmaking facilities, is more than 30 years old. The more efficient equipment will push up power output by some 20%, and gases from blast furnaces and coke ovens will be utilized as fuel.
Separately, JFE opened 20 billion yen worth of new steel facilities in Hiroshima Prefecture at the end of last year. The operations will start fully contributing to cost savings in fiscal 2015, according to an official.
The steel market in East Asia is expected to loosen further as Chinese giants Baoshan Iron & Steel and Wuhan Iron & Steel build large mills. Japanese steelmakers, which export almost half of their domestic output, face increasingly stiff competition.
JFE Steel was born via a 2003 merger of Kawasaki Steel and the steel business of NKK. It shut down two blast furnaces after the integration, and room for further streamlining is limited.
Source: Nikkei
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