Nippon Steel Corp is Japan's largest steel producer. A few days ago, executives said the company may shut down more blast furnaces in order to cut costs, due to the decline in steel demand and lower steel prices in Asia affecting its annual profit expectations.

Nippon Steel is also the third largest steel producer in the world, with 15 blast furnaces in Japan, two of which will be shut down around March 2024. This will reduce the company's production capacity and may weaken its position in the Asian market.

Sunhung Miyamoto, executive vice president of Nippon Steel, said the company's goal is to reduce fixed costs to an appropriate level, but there is no clear plan. Japan's steel exports account for more than 40% of its total steel production, but this number is likely to decline as the rest of Asia is looking to increase domestic steel production and China is also exporting more steel abroad.

He also said the Japanese government announced a $122bn fiscal plan Thursday to deal with stagnant economic growth, which could benefit the steel industry. The financial plan includes the construction of infrastructure in response to large-scale natural disasters.

In order to boost economic growth and offset the decline in domestic demand in Japan, Nippon Steel has been accelerating its overseas expansion. Last month, India's Supreme Court finally agreed that ArcelorMittal and Nippon Steel would acquire the bankrupt Essar steel after a legal dispute that had lasted for more than two years. Miyamoto said he plans to double Essar's production in the next few years, but they may revise some plans as demand for steel in India weakens.

The cheaper price of natural gas makes the direct reduction iron making plant (an iron making process that uses natural gas instead of coking coal to reduce iron ore) more cost-effective. "We will study economic efficiency to decide whether to build a blast furnace or a direct reduction plant," Miyamoto said