Godo Steel Recognizes Japanese Electric Furnace Reorganization Positively

Mr. Katsutoshi Kurikawa, president of Godo Steel which is Japanese major electric furnace steel maker, told at an interview with Japan Metal Bulletin the firm controls the annual investment in fiscal 2011 (ending in March 2012) at 3.5 billion yen, lower than the estimated amortization cost at 4.3 billion yen, and plans the almost same amount of annual investment in fiscal 2012, the smallest capex to keep stable operation and product quality. The investment in F2011 is mainly allocated to renewal of the old facilities and improvement of the product quality. Meanwhile, the firm keeps positive investment for new product development, he said.

As for the firm’s material costs, Mr. Kurikawa explained the average purchasing price of ferrous scrap was 28,000 yen per tonne in F2009 while 36,000 yen in F2010. The yearly average cost is estimated at around 36,000 yen in F2011 while forecasted to represent higher in F2012. Mr. Kurikawa emphasized Godo Steel reviews all material flows globally and tries to minimize procurement costs..

Mr. Kurikawa said it might be hard for Japanese electric furnace carbon steel makers to establish offshore productive bases since they supply the products mainly to domestic construction market. He explained Godo Steel’s export sales ratio lowered by 4 points to 12% in 1H of F2011 from the same period of F2010 while the export ratio kept the stable level. Semi-finished steels accounts for more than 70% in the firm’s exports. He told Godo Steel aims to cultivate East Asian market as the large area to consume imported semi-finish steels.

At last Mr. Kurikawa suggested Japanese electric furnaces including Godo Steel should accelerate merger and reorganization more to strengthen international competitiveness as well as to protect domestic market from imported products. He overviewed China currently produces and consumes reinforcing steel bar at 150 million tonnes per year but the domestic consumption would peak out in near future. Then Chinese rebar export might flow into Japan. The same situation is concerned on South Korea, he referred.

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