Nippon Steel : to shut Kashima blast furnace, Nikkei reports

TOKYO (Reuters) - Japan's biggest steelmaker Nippon Steel Corp plans to shut one of the two blast furnaces at its Kashima plant near Tokyo in the next few years, the Nikkei newspaper reported on Thursday without citing sources.

Along with other planned shutdowns, Nippon Steel's domestic production capacity will fall by about 20% when the Kashima furnace is shut, the Nikkei said.

The world's third-largest steelmaker said in February last year that it would permanently shut nearly 10% of its production capacity because of falling demand at home and competition from China.

Demand was hit further by the COVID-19 pandemic, forcing the steelmaker to idle several blast furnaces temporarily last year, reducing capacity by 32%, though three furnaces have resumed operations recently.

Steel demand from automakers has picked up, but the company still faces an overcapacity issue and the Japanese government's push toward decarbonisation could raise the operating cost of its blast furnaces, which emit high levels of CO2, the Nikkei said.

"The report is not based on our announcement," Nippon Steel said in a statement, adding that there has been no such decision over its Kashima plant.

(Reporting by Aaron Sheldrick and Yuka Obayashi; Editing by David Goodman)