Japan Major Steels Post Better Results in 1H F2010

Japanese major steel makers’ profitability improves in fiscal 2010 ending March 2011 when 78 companies or 95% out of major 82 makers expect to post consolidate recurring profit while only 54 makers or 65% posted the profit and 28 makers posted the loss in fiscal 2009. The makers improve the profitability under better operation rate and cost cutting effort when Japanese raw steel output will reach around 110 million tonnes in fiscal 2010 from 96.5 million tonnes in fiscal 2009 despite of negative factors including higher raw materials cost and severe export condition with higher yen rate.

Japanese integrated steel makers including Nippon Steel, JFE Holdings and special steel makers including Daido Steel, Aichi Steel and Sanyo Special Steel regained profitability in recurring profit in first half of fiscal 2010 while they posted the loss in same period of fiscal 2009. The steel processing makers including Toyo Seikan Kaisha NHK Spring and Maruichi Steel Tube and ferroalloy makers including Pacific Metals and Nippon Denko posted much higher profit. Only 19 companies or 23% posted the loss while 49 companies or 60% posted the loss in the same period of fiscal 2009.

Only 4 companies expect the recurring loss for fiscal 2010. However, the many makers expect lower profit in the second half of fiscal 2010 from the first half when the economy is getting slower in the second half due to higher yen rate, lower stock market and ongoing deflation along with slower industrial production.

Total recurring profit of the 82 makers was 419.3 billion yen in second half of fiscal 2009 compared with 292.4 billion yen of the loss in the first half of fiscal 2009. The profit reached 509.6 billion yen in the first half of fiscal 2010 but the profit decreases to 444 billion yen in the second half of fiscal 2010 while some makers didn’t disclose the outlook.

World economy has recovered from bottom a year earlier. However, stimulus package effect decreases at home and abroad and the economy could get into adjustment period. Japanese steel demand could decrease more due to higher yen rate and policy failure while offshore steel market could get oversupply due to aggressive expansion despite of the slow demand. Japanese steel makers should improve the international competitiveness and expand the offshore business to follow growing demand to keep improving the profitability under the severe market condition.