Japan 4 Integrated Steels Gain Favorable Profits in 1HF2010

Japanese 4 integrated steel makers gained consolidated recurring profits in the first half of fiscal 2010 (April-September 2010) while the makers were suffered from recurring losses in the first half of fiscal 2009. Sale volume of steel products recovered and all of 4 makers posted higher recurring profits than estimated. However, in the second half year, they prospect tough business circumstances when Japanese economy weakens while Chinese steel supply adjustment continues.

For a full year of fiscal 2010, Nippon Steel and JFE Holdings set their financial forecasts unchanged while Sumitomo Metal Industries revised down recurring profit forecast from 80 billion yen to 70 billion yen and Kobe Steel revised up recurring profit forecast from 75 billion yen to 80 billion yen.

Sumitomo Metals and Kobe Steel announced their first-6-month financial results on Thursday. Sumitomo Metals revised down its full-year operation profit forecast by 10 billion yen to 70 billion yen as well as downward review of recurring profit forecast. The firm estimates average sale price of steel products at around 95,000 yen per tonne for the second half year of fiscal 2010. The export rate in value is forecasted at 44% in the second half year and 42% in a full year.

Kobe Steel’s steel products sales decreased by 90,000 tonnes to 1.56 million tonnes in July-September compared with April-June. The steel business unit posted recurring loss at 4.6 billion yen in July-September due to cost up of raw materials, which is the first loss for the business unit after 4 quarters. The business unit forecasts 21 billion yen recurring profit for a full year of fiscal 2010, improving from 24.6 billion yen loss in fiscal 2009.

Kobe Steel forecasts lower profits in the second half year than in the first half year but the full-year profit is expected to increase by 5 billion yen to 80 billion yen compared with the previous outlook thanks to the favorable result in the first half year.