The 150-tonne arc furnace at Chita (2012)

How to read a single piece of plant renewal

The core of this investment does not fit inside the phrase “replacing an ageing furnace.” Into steelmaking equipment at Chita that had not been touched since the 1984 expansion, more than twenty years earlier, Daido Steel deliberately put some $250.7M (¥20bn) and doubled the melting unit from 70 tonnes to 150. The capacity to make volume and the capacity to handle high-grade steels — high-pressure alloys for common-rail systems, for instance — were to coexist on a single electric furnace. As demand shifted from quantity to quality, this was an answer to the question of how to rebuild the core of production.

That said, this one move did not complete the shift to higher value. Before and after start-up, results were still swung by automotive demand: operating profit fell to ¥15.4 billion in the year to March 2013, a reminder that new equipment does not insulate a business from the market. Even so, the thinking about alternative energy carried into the decarbonized electric furnace of 2024, and the policy of concentrating at one site carried into the second Chita works in 2020. Less a decision complete in itself than one step in a long process of piling both volume and quality onto a single location.