Lower Ferrous Scrap Price Lifts Japan Electric Furnaces’ Profit

Japanese 10 listed electric furnace steel makers posted higher recurring profit for April-December 2008 compared with same period of last year when ferrous scrap price plunged down after July 2008 though averaged price increased by 12,000-15,000 yen or 30-40% from same period 2007. Tokyo Tekko decreased the recurring profit and Toyohira Steel posted the recurring loss for April-December. The recurring profit rate against sales of 11 firms increased by 2.6 percentage points to 13.3% compared with same period a year ago. For fiscal ending March 2009, 4 firms revised up the profit outlook while the 3 revised down the target.

Ferrous scrap price rose to more than 70,000 yen per tonne in July 2008 from around 55,000 yen in April but plunged down to below 20,000 yen in November. Electric furnace steels improve the profitability compared with April-June while the products price increased. Tokyo Steel Manufacturing’s average price increased by 33,200 yen to 108,200 yen per tonne for April-December from same period 2007 while Godo Steel’s price increased by 28,213 yen to 97,599 yen per tonne. All of the listed electric steels except TOPY Industries estimate to increase the sales for fiscal ending March 2009 and 9 firms estimate to increase the recurring profit. TOPY and Yamato Kogyo estimate to decrease the recurring profit while Toyohira estimates to post the recurring loss for fiscal ending March 2009 for the first time in 6 years.