Tokyo Steel Eyes Future Cold Rolling Mill at Tahara, Mr. Nishimoto

Tokyo Steel Manufacturing’s president Toshikazu Nishimoto said to a reporter of Japan Metal Bulletin the firm eyes potential cold rolling mill at Tahara sheet steel plant. He said the firm now focuses on making money from the new plant but the firm has vision to build cold rolling mill in future as a part of the effort to shift the weight from long products to sheet products.

Mr. Nishimoto said the firm expects the steel sales will reach 1.3 million tonnes in the second half of fiscal 2010 through March 2011 totaling 2.4 million tonnes in the full year compared with 1.7 million tonnes in fiscal 2009. He sees the sales are lifted partly due to lower raw materials cost advantage for electric furnace steel than integrated steel cost along with better demand condition than bottom after Lehman shock.

Mr. Nishimoto said the offshore demand will increase in 2011 except for USA and Europe. However, he said the firm has no intention to increase the export and the firm tries to serve domestic buyers by recycling domestic ferrous scrap.

Mr. Nishimoto said the firm has room to increase the output when the production is still low at annual 2.4 million tonnes compared with more than 6 million tonnes of output capacity including 2.5 million tonnes at Tahara plant. However, he emphasizes the firm has no intention to increase loss making additional products.

Mr. Nishimoto expects Tahara’s output wouldn’t reach planned 500,000 tonnes of output in fiscal 2010. He expects the plant operation is stabilized and reaches annual 1 million tonnes level as early as possible. The firm hired a former university professor to get advice on operation for steel making and rolling mill in order to stabilize Tahara’s new processes.

The firm posted 1.5 billion yen of recurring loss in the first half of fiscal 2010. Mr. Nishimoto said the loss was due to start up of Tahara plant while other plants secured profit. When Tahara plant reaches normal operation, the firm can make money. The firm’s depreciation is annual 15 billion yen including 9 billion yen for Tahara. Mr. Nishimoto expects the firm improves the cash flow with the depreciation without immediate major investment.

Mr. Nishimoto said the firm imported some ferrous scrap from USA and South Korea and will import scrap depending on the profitability. He expects the firm can realize new scrap supply scheme based on the users’ proposals, under which the firm gets scrap supply from the users for free and provides steel products to get net process charge.

Mr. Nishimoto said the firm has no plan for alliance with offshore makers. He said Dongbu Steel of South Korea proposed potential technical tie-up but they didn’t reach the agreement. He is willing to keep cooperating with Dongbu Steel in mutual beneficial issues.