The steel industry is scrambling to expand its production capacity to meet increased demand, but rather than build expensive new facilities, manufacturers are retrofitting existing ones to save money. By upgrading blast furnaces and renovating steel sheet production lines, the steel industry is expected to keep up with demand over the next two to three years, according to Akio Mimura, chairman of the Japan Iron and Steel Federation.

The planned renovations at the nation's five largest steelmakers will raise their combined crude steel production capacity by an estimated 3.5 million tons-equivalent to the output of one large blast furnace-over three years through fiscal 2006, according to figures compiled by the Ministry of Economy, Trade and Industry.

Total investments are likely to come to about 150 billion yen.

JFE Steel Corp. plans to begin upgrading one of four blast furnaces in Fukuyama, Hiroshima Prefecture, next month.

It will invest 21 billion yen in the alterations and increase its crude steel production capacity by 600,000 tons per year. The furnace is scheduled to resume operations in April.

Nippon Steel Corp., which retrofitted a blast furnace at its Oita works last year, intends to do similar work on a blast furnace at its Nagoya works in fiscal 2005.

Kobe Steel Ltd. aims to upgrade a blast furnace in Kakogawa, Hyogo Prefecture, in fiscal 2007, raising the capacity of crude steel production by about 600,000 tons.

Manufacturers are also boosting capacity to process more crude steel into thin steel sheets for vehicles or into thick sheets for ships. Supply and demand for such products is tight.

The industry ministry projects that steel-sheet output for vehicles will grow by 6.3 million tons between fiscal 2004 and fiscal 2006, while that for ships will expand by about 1.5 million tons. The figures include joint venture projects in China.

Nippon Steel will invest 30 billion yen to renew its hot-dip galvanizing production lines in Nagoya and Kimitsu, Chiba Prefecture. The renewed lines are scheduled to be back in operation in the first half of 2006, resulting in a total production increase of 250,000 tons.

Sumitomo Metal Industries Ltd. expects to add 300,000 tons to the capacity of its hot-dip galvanizing production facility in Kashima, Ibaraki Prefecture, by the end of 2006.(IHT/Asahi: January 21,2005)