Nippon Steel & Sumitomo Metal Corp. will halt operations at a blast furnace at its iron mill in Kimitsu, Chiba Prefecture, sources said Tuesday.
The steelmaker is also considering postponing the start of operations, originally planned for this month, at its newly established furnace in Wakayama Prefecture the sources added.
The firm apparently aims to streamline its excess production capacity following its creation through the merger of Nippon Steel Corp. and Sumitomo Metal Industries Ltd. last October.
The furnace closure will be announced in the medium-term business plan to be released Wednesday, the sources said.
Based on Nippon Steel's history, it will be the first blast furnace closure since it halted operations at its Hirohata iron mill in Himeji, Hyogo Prefecture, in 1993.
Blast furnaces are a steelmaker's mainstay infrastructure for smelting iron ore to produce iron.
Currently, Nippon Steel & Sumitomo Metal has 14 blast furnaces, including three at the Kimitsu facility.
Of the three furnaces in Kimitsu, the company plans to close the oldest one.
Japanese steelmakers have been struggling to cope with the influx of cheap steel from China and South Korea and surging prices of raw materials.
Nippon Steel & Sumitomo Metal is expected to announce in the business plan specific measures to reduce annual costs by a total of ¥200 billion and to sell about ¥300 billion worth of assets to improve its financial footing.
The company's crude steel production is expected to amount to 43.5 million tons in fiscal 2012, which ends March 31, down about 8 percent from its peak.