Lower Demand, Metal Prices Impact on Japan Nonferrous Industry

Kobe Steel announced on Tuesday the aluminium and copper unit posted operating loss for April-December. The unit’s annual operating loss will be 28 billion yen for fiscal 2008 ending March 2009 compared with estimated 2 billion yen loss as of October 2008 and 22 billion yen of operating profit in fiscal 2007. Furukawa announced on Tuesday the firm revised the outlook downward to 700 million yen of net loss for fiscal 2008, which is the first loss in 5 years, compared with estimated 2 billion yen of profit as of November. Major demand drop impacts on nonferrous metal industry in Japan along with the plunging price of metals.

Kobe Steel’s aluminium and copper unit posted 8.219 billion yen of operating loss for April-December compared with 17.389 billion yen of operating profit in same period of 2007. Kobe Steel launched companywide task force to improve the cost structure. The firm cuts compensation of executives and cost of all business units and freezes new capital expenditure while the firm offers temporally holiday to the union.

Furukawa revised the operating profit outlook downward to 1.8 billion yen for fiscal 2008, which is 73.1% lower than estimated profit as of November. The recurring profit is expected to be 50 million yen for the year, which is 99% lower than previous outlook. The firm posted 64.4% lower operating profit and 77.1% lower recurring profit for April-December from same period of 2007.

Lower metal demand impacts on the nonferrous industry when the consuming sector of automobile and other industry reduce the operations. Lower price of nonferrous metals including copper and aluminium also reduces their profit along with higher yen rate.