Tougher Market Situation for Japan Steel Makers

World major steel makers including POSCO, US Steel and Nucor announced higher sales and profit in April-June from same period of 2010 due to recovering steel shipment and selling price. Japanese steel makers would report slower recovery than offshore steel makers due to slow domestic demand after the major earthquake and lower export profit under extremely high yen rate.

POSCO posted 22.6% higher net profit at 1.372 trillion won for April-June from same period of 2010. The parent company’s operating profit increased by 62.4% to 1.496 trillion won when the steel shipment increased to 8.66 million tonnes along with cost cutting effort.

Nucor posted 3.3 times net profit at US$ 299 million for April-June from same period of 2010. The firm improved the margin when the steel selling price increased by 21.4% to US$ 891 per net ton while ferrous scrap purchase cost increased by 19% to US$ 444. US Steel posted US$ 222 million of net profit for April-June, which was the first profit in 10 quarters, compared with US$ 25 million in same period of 2010 due to higher steel selling price.

Japanese major 5 steel makers posted higher sales and profit in fiscal 2010 ended March 2011 than results in fiscal 2009 due to higher sales under recovering steel demand at home and abroad. However, their margin has decreased in every quarters when they failed to pass higher quarterly raw materials cost on the steel selling price. They didn’t disclose profit target for fiscal 2011 citing uncertainty for raw materials cost, steel selling price and demand.

Japanese steel makers experienced tough time in April-June due to slow demand, higher raw materials cost and low steel selling price. The situation could be severer in July-September with high raw materials cost, adjustment in Asian market and higher yen rate along when Japanese steel export could decrease and the import could increase. Japanese steel industry expects domestic demand improves especially for automobile in July-September and the export market improves in and after October.