March 27, 2020
Company Name:
Representative:
Contact:

JFE Holdings, Inc. (Code: 5411)
Koji Kakigi, President and CEO
Public Relations, General Administration Department, JFE Steel Corporation
Tel: +81-3-3597-3166

To whom it may concern:

JFE Steel to Optimize Domestic Production Operations through Structural Reforms
JFE Steel Corporation, an operating company of JFE Holdings, Inc., announced today that it will
optimize its domestic production operations through structural reforms. The details are explained
herein.

News Release
March 27, 2020

JFE Steel Corporation

JFE Steel to Optimize Domestic Production Operations through Structural Reforms
JFE Steel Corporation announced today that in response to fundamental changes taking place inboth the Japanese and international steel businesses, the company has decided to transition to an
operating configuration based on seven blast furnaces, down from eight at present, and to review
production operations by focusing resources more strategically on key products for enhancedcompetitiveness.
The reforms to be carried out as well as the expected effects and the related stakeholder
considerations, strategies, etc. are outlined herein.
1. Main structural reforms● Domestic operations will be consolidated from eight blast furnaces to seven and crude steel
production capacity will be reduced by around 4 million tons, or about 13%. This will enable
JFE Steel to enhance the overall competitiveness of its blast‐furnace integrated steelworks
and maximize manufacturing capacity at each steelworks and other works. In turn, this will
support the company’s sales and product strategies and ultimately earnings in priority fields
including automobiles, energy, and materials for construction and infrastructure.
● By FY2023(ending March 2024) or thereabouts, upstream processes including iron making andsteelmaking and hot rolling equipment in the East Japan Works (Keihin)will be shut down,
and the East Japan Works’ production of steel sheet, with the exclusion of some products(pickled steel sheet and special steel), will be consolidated in Chiba. The main facilities to be
shut down in Keihin are the blast furnace, shaft furnace, sintering machine, coke ovens,converter, electric arc furnace, continuous casting machines, hot rolling equipment (excluding
pickling line and skinpass mill: see attachment for details).
Also, as previously announced, some cold‐rolling and surface‐treated steel sheet lines will beshut down at the end of FY2019.
● Chiba will continue to function as an integrated blast‐furnace production base in East Japan to
manufacture primarily automotive steel sheet, which is one of our priority fields, as well as
stainless steel and iron powder. In conjunction, blast furnace will be refitted by 2023 orthereabouts.
Also, as previously announced, facilities manufacturing steel sheet for cans will be shut downby FY2022.
● Facilities in Keihin will continue to serve as the East Japan Works’ center for manufacturing
steel plate mainly used in construction and steel pipe products, for which the West Japan
Works and other areas will supply semi‐finished products. The Kurashiki No. 7 continuous
casting machine, scheduled to start up at the end of FY2020, will supply the steel plate millwith high‐quality, low‐cost semi‐finished products, helping to enhance competitiveness.
● Operational efficiency and productivity will be upgraded with advanced IT and data science,and the company’s organization and systems, including head office departments, will bestreamlined on a company‐wide basis.
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● To facilitate reforms swiftly and efficiently, a Special Initiatives Headquarters will beestablished on April 1. The Headquarters will be headed by JFE Steel President Yoshihisa
Kitano as its head.
2. Expected effects● The reduction of fixed costs and other expenditures due to the shutdowns are expected toboost annual profit by around 60 billion yen. This figure includes the effects of previously
announced shutdowns of facilities for producing steel sheet for cans in the Chiba district andcold‐rolling and surface‐treated steel sheet facilities in the Keihin district.
● By shutting down these selected facilities, outlays envisioned for the renewal of aging
equipment will be reduced by some 200 billion yen over the next 10 years.
3. Recognition of impairment losses
In accordance with these structural reforms, JFE Steel will recognize impairment losses totalingaround 220 billion yen in its FY2019 accounts, comprising 130 billion for Chiba district operations
and 90 billion yen for Keihin district operations.
4. Stakeholder considerations● Going forward, JFE Steel will provide detailed explanations of these initiatives to all
stakeholders, including customers, business partners, employees, local communities andgovernments, shareholders and investors.
● Employment for some 1,200 people working at facilities scheduled to be shut down will be
secured through redeployment and other means.
● JFE Steel will also work in good faith with JFE group companies and partners (involving some
2,000 employees) that are likely to be affected by the shutdowns.
● Related parties, including local communities and government, will be closely consultedregarding the repurposing of Keihin district facilities scheduled for shutdown.
5. Related growth strategies
In connection with these structural reforms, JFE Steel will implement the following strategies tostrengthen the company’s sustainable growth and financial soundness.
● JFE Steel will invest strategically in its domestic steelworks and other works, including WestJapan Works, as our mainstay steelworks, and the refitting of the No. 6 blast furnace in Chiba.
This follows previous efforts to enhance competitiveness, including constructing the No. 3
sintering machine and No. 3 coke oven in Fukuyama, constructing the No. 7 continuous
casting machine and refitting the No. 4 blast furnace in Kurashiki, and expanding electricalsteel sheet manufacturing facilities.
● Earnings bases overseas will be enhanced as a crucial component of the company’s strategy
to grow corporate value. So far, JFE Steel has succeeded in capturing demand in promisingoverseas markets through, for example, production of automotive steel sheet in China,
Thailand, Indonesia and Mexico using substrates from Japan. To further boost overseas
earnings, JFE Steel will strengthen the value of alliance partners and operating companies inoverseas growth markets. These include the long‐term strategic alliance with JSW Steel inIndia, the specialty bar steel joint venture with the BaoWu Steel Group in China, and the joint
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venture in Myanmar to produce steel sheet products for construction. In addition, the new
Global Business Development Center to be established on April 1, as previously announced,
will focus on maximizing earnings from existing overseas businesses and developing new
growth opportunities.
Going forward, JFE Steel will make every effort to strengthen the competitiveness of its domestic
manufacturing bases as well as expand the earnings power of its overseas businesses to furtherenhance the company’s corporate value over the long term.
Background
JFE Steel is facing an unprecedented and extremely challenging operating environment, particularly
a slump in steel demand among manufacturing industries, due to U.S.‐China trade tensions, rising
raw‐material prices driven by China’s increased output of crude steel, and rising prices for various
commodities and services including auxiliary raw materials, other materials used in production, andlogistics. In FY2019, for the first time since JFE Steel’s founding, it faces the critical prospect of zeroprofit. Additionally, over the medium to long term, demand in the Japanese market is expected todecline amid population decline and other factors, while overseas markets will present increasingly
intense competition due to expanding steel‐production capacity in developing economies and thegrowth of Chinese exports due to falling domestic demand in that country. So far, JFE Steel has
been strengthening its domestic steel works and manufacturing locations as well as overall
manufacturing capabilities, as spelled out in the company’s medium‐term business plan. Goingforward, continuous large‐scale investment to renew aging facilities and equipment will be neededover the long term.
JFE Steel, in view of the structural changes taking place in its operating environment, aims tobecome a leaner, stronger company through more strategic allocation of corporate resources. This
will involve selectively concentrating resources on products and business areas where the company
has competitive advantages to maintain and enhance its competitiveness in international markets.
To that end, the company has decided to shut down one of the blast furnaces in its East Japan
Works, for which fixed costs are high, and implement structural reforms to optimize its remaining
production operations in Japan.
For more information about this release, please contact:
JFE Steel Corporation: https://www.jfe‐steel.co.jp/cgi‐bin/contact.cgi

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Attachment 1: Main Facilities Scheduled for Shutdown (* indicates already disclosed)
District

Facility
No. 2 Blast Furnace
Shaft Furnace
No. 1 Sintering Machine
No. 1 Coke Oven
No. 2 Coke OvenRaw material facilities

KeihinConverters
No1. Electric Arc Furnace
No. 1 Continuous Casting
MachineNo. 3 Continuous Casting
MachineNo. 5 Continuous Casting
Machine
Hot Rolling Facilities (excl.
pickling line and skinpassmill)*No. 1 Tandem Cold Mill

*No. 3 CGL*No. 2 Tandem Mill
*No. 2 CAL
Chiba*No. 4 CAL*TFL*No. 2 ETL

Details
Furnace volume:
5,000m3
Furnace volume:
172m3
Grate area: 450m2
124 chambers
74 chambers
Facilities for loading,inventory intake/
distribution, etc.
2 x 328t/ch
1 x 50t/ch

November 1976
April 1979

2‐strand (slab)

November 1976

2‐strand (slab)

March 1979

6‐strand (billet)

December 1982

Thickness: 1.2–25.4mm
Width: 600–2,300mm

March 1979

Thickness: 0.12–1.65mm
Width: 600–1,305mm

April 1961

Thickness: 0.27–
2.3mm
Width: 610–1,250mm
Thickness: 0.1–0.6mm
Width: 600–1,100mm
Thickness: 0.17–0.6mm
Width: 600–1,250mm
Thickness: 0.15–0.4mm
Width: 600–1,067mm
Thickness: 0.1–0.6mm
Width: 457–1,067mm
Thickness: 0.1–0.6mm
Width:600–1,067mm

4Original Startup

Shutdown Timing

March 2004
August 2008
October 1976
November 1976
July 1979

By FY2023

Within FY2019
April 1983
May 1963

By FY2022

July 1980

Within FY2019

March 1990
By FY2022
June 1983
November 1972

Within FY2019