Tokyo Steel’s president Toshikazu Nishimoto said to a reporter of Japan Metal Bulletin the firm eyes cold rolling operation at Tahara plant in future. He said the firm tries to increase the sales volume in fiscal 2012 starting April 2012 when the domestic steel demand will increase for the rebuilding activity. He said the firm also increases the export despite of the prevailing uncertainty. He said the firm targets to increase the production in fiscal 2012 to fiscal 2007 level at around 3.2 million tonnes while the volume is much less than the record of 4.2 million tonnes during bubble economy. He targets 60% of flat steel production rate in fiscal 2012 compared with 55% in first half of fiscal 2011 by increasing the production to 1 million tonnes at Tahara plant.
Mr. Nishimoto sees ferrous scrap market is overvalued when combined iron ore and coking coal cost decreases to less than 30,000 yen per tonne for January-March from October-December. He said the firm wanted 5,000 yen per tonne of steel price hike for distributors for January order under the severe profitability but the firm finally offered lower price hike due to slow market. Mr. Nishimoto said the top priority task in first half of fiscal 2011 started in April and the firm cleared neck process to stabilize Tahara plant operation and stabilized the quality. He said Tahara’s operation still depends on order level under severe market condition. He expects the firm’s production couldn’t clear target volume in October-December compared with 1.45 million tonnes of production in second half of fiscal 2011 while the firm planned 2.7 million tonnes of production including 440,000 tonnes at Tahara for the full year as of October. Mr. Nishimoto said the firm decided to stop production at Takamatsu plant due to shrinking domestic demand for concrete reinforcing steel bar. He said domestic rebar distribution has shifted from the dealers’ sales from their stock to direct shipment from the makers to the users. The change squeezes Tokyo Steel’s marketing style while the firm has shipped rebar to other areas including Tokyo and Osaka while the rebar demand decrease is larger in Shikoku area including Takamatsu than other areas. He said the firm focuses the resources on rebar making Okayama plant. He said the firm withdraws from wire rod production due to severe competition with import from China. Mr. Nishimoto said the firm converts rolling mill at Okayama plant and shifts rebar cutting line from Takamatsu plant to Okayama to make larger sized rebar instead of Takamatsu. He said the firm will sell idle facility at Takamatsu and some makers in Southeast Asia show interests in the purchase while the firm could use the facility at other plants. He said Takamatsu keeps scrap purchase operation and sells flat rolled sheet and plate from Okayama. Mr. Nishimoto said the firm has no plan to close other plants. He emphasized the firm tries to improve the presence at the plants including Okayama with rebar, H-beam and cold rolled and coated sheet and Kyushu plant with heavy H-beam and plate while the firm serves the earthquake rebuilding activity in northeastern Japan by supplying shapes from Utsunomiya plant. Mr. Nishimoto said the firm tries to expand the sales both for distributors and contract users in order to secure domestic production and sales when the export market is severe under historical high yen rate. He said the firm improves the services in small lot and shorter lead time delivery while the firm expands inventory sales in volume and items variation at all plants and deposit yards of the partners of freight companies. He said the firm increases sample shipment for the users for automakers and appliances makers and already gets contract from some of the users while the firm develops new application through the flat roll steel task force. Mr. Nishimoto said the firm eyes options for potential partnership with offshore makers in technical and business alliance. He said the firm has no plan to build offshore production base but the firm tries to increase sales for growing Asian market. Mr. Nishimoto said scrap generation increases worldwide and South Korea and China will export scrap in future. He said the firm with electric furnace flat steel operations is well positioned to utilize the additional scrap supply. He is confident for the long term strategy to improve the technology for scrap based flat steel making.