Higher Cost Slashes Japan 4 Integrated Steels’ Profit in F2010

Japanese 5 integrated steel makers reported better consolidated sales and profit for fiscal 2010 ended March 2011 compared with results for fiscal 2009 due to recovery of steel demand for export and domestic industry. However, the 4 makers excluding Kobe Steel posted lower profit than original plan when their margin was narrower than expected due to higher raw materials cost and limited increase for steel selling price.

All of Japanese 5 integrated steel makers failed to disclose earning forecast for fiscal 2011. JFE Holdings’ vice president Yoshio Ishikawa said the firm cannot calculate reasonable profit target under uncertain impact by the major earthquake. Raw material cost increased by around 15,000 yen per tonne in first quarter of fiscal 2011 after the 5 makers already suffered from higher material cost in fiscal 2010. Their largest challenge is to increase the steel selling price by more than the cost up to improve the normal margin for sustainable steel operation. Nippon Steel’s vice president Shinichi Taniguchi said the firm tries to increase steel selling price at higher than material cost surge.