JFE Steel Tries to Enhance Competitiveness and Investment in Emerging Countries

Mr. Yajima Tsutomu, vice president of JFE Steel, said at an interview with Japan Metal Bulletin that JFE Steel aggressively cultivates overseas steel demand when the firm completed crude steel output capacity expansion to 33 million tonnes per year by starting operation of a large blast furnace in West Japan iron works. Mr. Yajima explained JFE Steel seeks competitive demand fields and regions at overseas to be uninvolved in price competition. JFE Steel is reviewing its export business organization and establishing new offices in India, Vietnam and Dubai. The firm eyes enhancement of direct export as well as investment in offshore steel re-rollers and participation in local steel business at overseas. Mr. Yajima said JFE Steel newly cultivated 60 export destination companies for approximately 2 million tonnes of steels in fiscal 2009-2010 and tries to increase the customers by 30 companies for additional 1-million-tonne steel export in fiscal 2011 ending in March 2012.

Mr. Yajima explained steel makers in advanced countries maintained positive earnings before world financial crisis and steel makers in emerging countries increased investment for high quality steel products such as seamless steel tube and magnetic steel sheet with high price competitiveness He said JFE Steel is trying to keep its competitiveness with technology edge such for magnetic steel sheet, automotive high tensile sheet or tin plate. The firm built up supply system of cold rolled sheet at Guang Zhou JFE Steel while advanced strategic investment in India and Thailand. The firm is also examining tin plate business expansion in Indian and Mid-East markets.

Mr. Yajima said JFE Steel is currently increasing investment and technical support in offshore re-rollers in order to enhance “vertical business specialization” at overseas while JFE Steel is also accelerating market cultivation for building and civil engineering materials especially for infrastructures in emerging countries.

Mr. Yajima said Japanese steel demand would hit bottom for April-June under influence of mega earthquake, upturn after July and go back to the pre-disaster level for October-December. He forecasts Japanese carbon steel consumption would keep flat in fiscal 2011 compared with fiscal 2010 when the basic demand slightly increases and automobile output slightly decreases to 8.2-8.5 million units

Mr. Yajima explained JFE Steel’s crude steel output was 2.2 million tonnes in April and slightly recovered in May. He said the production would total about 7 million tonnes for April-June and the annual production is expected to keep the volume almost as much as in fiscal 2010 at 28.8 million tonnes.

JFE Steel launched out price hike of steel products by 20,000 yen per tonne for domestic market and by US$ 250-300 per tonne for export since raw material prices hit record high for April-June. Mr. Yajima explained the price negotiations are hard for hot coil and steel plate export along weak trend of Asian steel market He said the firm continues steady efforts for price hike.

As for mid-term management strategy, Mr. Yajima said the market conditions involve weak growth of domestic market, oversupply condition in Asian steel market due to China’s export increase and underlying trend of strong yen. JFE Steel seeks next mid-term management plan that the firm builds up sales strategy for sustainable profitability.