Nippon Steel plans eight percent output cut in April-June

Nippon Steel Corp will cut output in the April-June quarter by 8 percent from the previous three months in response to a slump in domestic demand after the March 11 quake, but is ready to boost levels once a recovery in manufacturing production is confirmed.
The world's No 4 steelmaker plans crude steel output of 7.6 million tonnes this quarter after the quake, tsunami and ensuing nuclear crisis resulted in power and parts shortages that forced key automaker clients like Toyota to slash output by 50 percent.
Toyota last week said output would begin recovering in June as parts makers come back on line, two months earlier than it had expected. It now expects output recover to about 70 percent of plans before the quake. Nissan Motor said it expects global output to return to normal by October.
"We are ready to boost output anytime soon once the recovery in auto output is confirmed," Nippon Steel executive vice president Shinichi Taniguchi told Reuters in an interview conducted on May 12.
But he said it will take a while before demand from post-quake reconstruction starts to increase as piles of rubble and wreckage still need to be cleared away.
Taniguchi said the company aims to raise export price of hot rolled coils for June to above $850 per tonne, up from around $700 per tonne, to pass on 15,000 yen ($185) jump in per-tonne input costs.
"There is demand in Asia. The market should rise unless we produce more than we should," he said. South Korean rival POSCO in April raised domestic steel prices by a higher-than-expected 16-18 percent in its first increase since July last year to reflect surging iron ore and coking coal costs. Goldman Sachs said that a price recovery in Asian steel markets make take a couple more quarters.
"Some prices recently started to recover in Asia, but there is scepticism if these cost-push driven hikes will really hold," analyst Rajeev Das said in a research note in April. "The main reason is that seasonal pick up in the April-June demand in Asia is still weak, even from traditional markets in ASEAN which tend to import a lot."
According to a government poll, Japanese steelmakers, the world's biggest steel exporters in 2010, plan to produce only 2.8 percent less this quarter at 26.89 million tonnes compared to January-March, counting on demand related to post-quake reconstruction to mostly offset weakness in the auto sector.