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Nippon Steel & Sumitomo Metal Corp. and JFE Holdings Inc. cut their profit forecasts for the year as the nation’s top two producers respond to a global supply glut spurred by unprecedented Chinese exports.

Japan’s steel companies are battling against falling prices on export markets, as China, which accounts for about half of global output, ships its excess overseas. The chairman of Japan’s Iron and Steel Federation said last week that China’s inability to soak up all the metal it produces due to slowing growth constitutes the biggest risk facing the steel industry. About 40 percent of Nippon Steel’s revenues came from exports last year.

The world’s biggest producer by market value said it now expects net income for the year through March at ¥180 billion ($1.49 billion), from a previous forecast of ¥260 billion, citing “extremely tough conditions” on overseas markets.

JFE Holdings, Japan’s no. 2 mill, halved its current profit forecast to ¥100 billion.

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