Both of its majors – Nippon Steel and JFE Steel are embarking on significant restructuring of their domestic operations which commenced in 2019 to eliminate 16Mtpa of crude steel capacity. This has the outcome of reducing fixed costs from aging steelmaking assets and changing product mix to high valued add steels.  

Due to its mature economy and increased nationalism in client countries, Japan’s steel production has fallen in recent years. Its domestic finished steel consumption is dominated by two sectors – construction (building and civil engineering) and manufacturing (automotives, shipbuilding and others). AME’s forecasts crude steel production over the medium to longer term flat from 2026 to 2040. The large Japanese steel producers have plans to grow its market share through overseas investments.

Japan’s government has introduced policies to cut carbon emissions by 45% from 2013 levels. Under the government’s energy plan, coal, oil and gas will account for 56% of electricity generation by 2030, while renewables are expected to provide up to 24% of power.

Japanese steel producers plan to reduce CO2 in blast furnaces by 30% by partially replacing coke, with hydrogen generated with the steel plant and separating and recovering CO2 generated inside the blast furnace. The technology is being developed with commercialisation expected by 2030. This project is known as COURSE 50 – CO2 Ultimate Reduction System for Cool Earth 50. 

Nippon Steel

Nippon Steel is aiming for a 30% reduction in carbon emissions by 2030 (compared to 2013) and net zero by 2050. The company will achieve these targets by development of large size EAFs combined with 100% hydrogen-DRI and carbon capture with blast furnace steelmaking.

Nippon Steel is restructuring by reducing its total blast furnaces from 15 to 10, equivalent to 10Mt of crude steel capacity, or 20% of production. This will reduce costs and carbon emissions. Its hot strip mill and pickling line are expected to shut down at Setouchi Works by September 2023.

Nippon Steel plans to refurbish two coking plants at separate steel facilities. The renovation works include coking plant #2 at Kyushu Works (Oita), with planned commissioning by March 2026. The other refurbishment incudes coking plant #3 at East Nippon Works (Kimitsu) and planned to be completed by September 2026.

The refurbishments are in line with the company’s comprehensive strategy to restructure its steelmaking assets to reduce its fixed costs. The company continues to shutdown various equipment - by early 2023 including, a pickling line (Kashima), a galvalume coating line (Sakai) and part of a slab continuous casting machine #3 (Wakayama). The company plans to utilise the new electric arc furnace at the Setouchi Works in western Japan and is scheduled to start commercial production later this year.

Nippon Steel will offer certified low-carbon steel products next year under the brand – NSCarbolex. These are further classified as ‘Neutral’ and ‘Solution’. The neutral low-carbon steel will utilise a ‘mass balance method’ and actual CO2 emissions of Nippon Steel’s own manufacturing process. Products sold as NSCarbolex Neutral will be third party certified to authenticate CO2 emissions during manufacturer.

Low carbon steel – ‘solution’ includes the company’s high-performance products and solution technologies. These are steel products which contribute to the energy transition such as, EVs, solar, wind, and geothermal. CO2 reduction can be realised by a reduction in material usage per product equating to more energy savings and analysis of life cycle of customers’ product by extending maintenance cycles. Nippon Steel aims to supply 10Mt of low-carbon steel in 2030. 

The company’s international expansion plans by the second half of fiscal year 2026 targets total crude steel production capacity of 70Mt, with 26Mt from international operations. This implies an increase of 37%, from 19Mt during the period.

The growth will come from AMNS Calvert and AMNS India during 2023 to 2026. The longer-term vision of Nippon Steel is to have a crude steel production capacity of 100Mt. This will be generated from further expansions of AMNS India and the company’s participation in M&A’s, equity investment or expansion of existing steel mills.

AMNS India expansion to 15Mtpa (Phase 1A) is expected to be completed by 2026. While phase 1B to 20Mt has feasibility studies underway. Also, phase 2 greenfield options are being assessed, to increase to at least 30Mtpa. Nippon steel acquired G/GJ Steel in February 2022, strengthening its international footprint in Thailand with total EAF meltshop capacity of 3Mtpa and hot strip mill capacity of 3.4Mtpa.

JFE Steel

JFE Steel is aiming to reduce their carbon emissions by 18% by 2024 and 30% by 2030 (compared to 2013) and net zero by 2050. Like Nippon, JFE will hedge their bets by investing in carbon capture with BFs and H2-DRI with EAFs in the lead up to 2050.  JFE Steel is implementing its business plan and is transitioning from ‘quantity to quality’. JFE Steel is planning to shut down its upstream and hot rolling facilities at Keihin Works by March 2024. This will result in a reduced crude steel capacity of around 6Mt.

The company will implement cost reductions of US$1.1bn over four years (FY2021 to FY2024), to increase the per-ton profit from fixed costs reduction. The total number of employees is expected to decline from 16k to 13k. JFE Steel is also planning to increase its mix of high valued-added steel products to 50%.

Specific product mix enhancements include increase non-oriented electrical steel sheet production capacity, increase capacity for heavy, extra-thick steel plate for offshore wind-power applications, and production of high-tensile steel sheet for automotive sector.

JFE Steel will construct new test facilities for two research and development projects as part of their carbon neutral by 2050 strategy. The first project will develop carbon capture and utilisation for methanol synthesis at JFE Steel West Japan Works (Fukuyama Area).

Construction will commence in 2022 and production in 2023. Demonstration testing will be completed by 2025. The project is a partnership with the Research Institute of Innovative Technology for the Earth.

The second project will develop carbon capture and utilisation for carbon fixation in steel slag for road construction. Construction will begin at JFE Steel East Japan Works (Chiba Area) in 2023 and begin production in 2024. Demonstration testing will be completed by 2025. The project is a partnership with Ehime University. The technology could also be applied to coal power stations.

JFE Steel has plans to invest US$7bn on low-carbon technology over the next 8 years. The company considering the construction of an electric arc furnace to replace a blast furnace at its site in west Japan, Kurashiki plant. Steelmakers are increasingly under pressure to reduce their carbon emissions to mitigate climate change.

The company has its schedule to refurbish its BF fleet every 20 to 25 year and is researching the possible construction of an EAF sometime between 2027 and 2030. This is when the #2 unit at Kurashiki is due for refurbishment.

JFE has stated it would maintain an annual crude steel output of 26Mt if the decision is made to switch its BF to EAF steelmaking. Total crude steel capacity at Kurashiki facility is 10.2Mtpa with #2 BF having pig iron capacity of 3.2Mtpa.

Kurashiki will invest in reinforced extra-thick steel plate production line by March 2024, for offshore wind-power application. Also, at the same facility new investment will be allocated towards non-oriented electrical steel sheet production line, commissioning planned by March 2022.