Japan Major 4 Steels Report Lower Margin in April-June

Japanese major 4 integrated steel makers reported by Thursday they failed to pass higher raw materials cost on steel selling price in April-June while the steel sales volume decreased from same period of 2010 due to slow domestic demand after the major earthquake and higher yen rate. Nippon Steel, JFE Holdings and Kobe Steel reported lower consolidated recurring profit from same period of 2010.

Nippon Steel targets 230 billion yen of recurring profit for fiscal 2011 as fiscal 2010 while the firm didn’t disclosed the target in April. JFE Holdings expects 130 billion yen of recurring profit, which is 22% lower than fiscal 2010, and Kobe Steel expects 50 billion yen of recurring profit, which is 44% lower than fiscal 2010. Sumitomo Metal Industries expects 100 billion yen of recurring profit, which is 2.9 times of fiscal 2010 level, due to lower profit in fiscal 2010 and favorable business condition for the core products.

They expect higher steel price in July-September than April-June especially for contract users. However, they have to improve the margin for core steel business to improve the results when they have failed to pass higher raw materials cost on the steel price while main raw materials cost surged since the price setting shifted to quarterly base in April 2010.