Japan Major Steels Expect Lower Profit for F2008

Japanese major steel makers expect extremely high cost for raw materials and energy reduce the profit for the year ending March 2009. Nippon Steel announced the provisional consolidated recurring profit is 370 billion yen for the year, which is 34.4% lower than previous year when the cost of raw materials, energy and freight increases by around 1 trillion yen for the year from previous year. They try to increase the steel selling price by around 30,000 yen per tonne to cover the higher cost. Their profitability could improve depending on how much and how early they would realize the price hike.Kobe Steel expects the consolidated recurring profit decreases by 24% to 120 billion yen for the year ending March 2009 from previous year. Sumitomo Metal Industries said the profit decreases by 29.6% to 210 billion yen and Nisshin Steel said the profit decreases by 19.3% to 44 billion yen. JFE Holdings said the firm cannot estimate before finishing raw materials price and steel selling price negotiations while the firm expects more than 800 billion yen of higher cost for raw materials including ferrous scrap for group’s electric furnaces. According to major 5 steel makers’ estimates, their cost for raw materials, energy and freight increases by 2.6 trillion yen for the year ending March 2009 compared with previous year. They try to reduce the cost through across the board effort in each company. However, they seek around 30,000 yen per tonne of higher steel price to cover the jumping raw materials cost. They also cooperate with major users including automakers to improve the operations by reducing the specifications of steel items for better productivity.