JFE's Production Shift Signals Decline in Coke Demand, Reshaping Met Coal Outlook

JFE Steel's latest medium-term plan outlines a major transformation in Japan's steel industry, with crude steel capacity set to drop from 26 Mt to 21 Mt by FY2027. Key closures include multiple blast furnaces and coke ovens across Kurashiki and Fukuyama, as JFE transitions toward a leaner, value-driven production model. The centerpiece is a new 2 Mt electric arc furnace (EAF) at Kurashiki, slated for operation in FY2028, aimed at producing high-quality green steel. With coke ovens 1B, 4AB, and 4ABC scheduled for shutdown by FY2027, demand for metallurgical coal is expected to decline structurally in Japan. While blast furnace steel remains essential for high-end applications, the pivot to EAFs and recycled scrap reflects global decarbonization trends. For met coal suppliers, Japan’s retreat from coke-intensive production suggests long-term volume erosion, even as Indian and Southeast Asian demand offset some losses in the near term.