Nippon Steel, the world’s second largest producer, will consider revising down its production outlook after seeing Toyota and Honda first-quarter output plans due later this month, a company executive has said, adding that the supplier expects demand to start recovering around mid-year.
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Executive vice president Kiichiroh Masuda also said the company would continue its strategy of expanding globally despite the current economic downturn, as demand is expected to recover somewhat in a few years, Reuters reported.
The supplier has slashed its annual outlook by 36% and forecast a loss for the current quarter as the expanding global recession reduces sales by key automaking customers including Toyota and Honda, while demand has slowed in all sectors.
“We are closely watching Toyota and Honda’s April-June production plans and we will review our plans then,” Masuda told the news agency in an interview on Monday.
“In case Toyota cuts its April output plans, we will further reduce our production after April, though we think the chance is small,” Masuda said.
Nippon Steel had said its output will plunge by about 40% in January-March from a year earlier to a record low 5m tonnes, the report noted.
Though it plans to idle two blast furnaces for several months to cope with the production cut, it expects to restart them later this year, betting automakers will see inventories return to appropriate levels by June and start increasing output to match real demand by around July at the latest.
