JFE Steel Studies for Upstream Operation in Asia, Brazil

JFE Steel’s president Hajime Bada said to a reporter of Japan Metal Bulletin the firm studies potential upper stream operation in several countries including Asia and Brazil. He said the firm tries to expand the high value supply to meet growing demand in developing areas. The firm already showed the willingness to build blast furnace in Thailand and keeps studying the market and infrastructure availability. Mr. Bada said the firm also launches 1.8 million tonnes of cold rolling mill and 400,000 tonnes of no.2 galvanizing line at Guangzhou, China in 2010 to meet growing automotive demand. He said it is time to build continuous galvanizing line in Thailand to meet growing automotive demand when the automobile output is annual 1.7 million units. He said the firm keeps study for the investment. He said the firm opens India office in April to research the market for future business including local production facilities. Mr. Bada said the firm tries to expand the high valued steel output by 3 million tonnes in 3-year plan through fiscal 2008. He said the firm already launched new continuous galvanizing line at Fukuyama area of West Japan works. He said the firm tries to expand the capacity of hot strip and plate mills companywide to increase the capacity by 2 million tonnes to 21 million tonnes per year for hot strip and by 500,000 tonnes to 6 million tonnes for plate by the end of fiscal 2008. Mr. Bada said the firm expands the raw steel output by 3 million tonnes to annual 33 million tonnes in next 3-year plan through fiscal 2011 to meet growing demand for high valued steel in Asia. He said the firm will decide the 150 billion yen investment in fiscal 2008. He said the firm adds a slab caster at Fukuyama and a degasser at Keihin area of East Japan works while the firm expands the hot strip capacity by additional 3 million tonnes. He said the firm expands the raw steel output by utilizing annual 2 million tonnes of ferrous scrap from market to increase the output by 3 million tonnes. Mr. Bada said JFE Steel agreed with Vale to increase the iron ore price by 65% for fiscal 2008 from fiscal 2007 under tight supply. He said coking coal supply is very tight and the spot price surges due to impact of heavy rain in Australia. He said the firm will increase the steel price to keep stable supply when the higher cost for freight and raw materials including manganese and ferrous scrap is well above steel makers’ control and Japanese steel price, especially contract price is lower than international level. Mr. Bada said the world steel demand keeps firm and the high valued steel for manufacturers is very strong despite of US economy’s slowdown. He warns, however, Japanese slow building demand could reduce the steel demand even for consumer durable and capital expenditure applications. He expects the Japan Iron and Steel Federation estimates the world steel demand will increase by 5.7% in 2008 from 2007.