JFE Steel’s Chita to Regain Profitability in 1H F2010

JFE Steel’s Chita plant plans better operation rate in first half of fiscal 2010 as high as more than 80% of the peak. The operation is improving from second half of fiscal 2009. The plant expects to return to profitability in the first half due to higher export demand for energy industry and higher selling price. The plant continues effort to better profitability even with severe business condition.

The demand for energy related steel pipe including oil well tube which is the main products for the plant, decreased since late 2008 under worldwide economy slump. The plant’s operation rate decreased to as low as 50% at the bottom. The plant improved the operation rate since second half of fiscal 2009 and the operation rate reached more than 80% of the peak. The firm expects the better market condition continues when oil well tube export recovers and smaller sized oil well tube demand shows sign to recover while the domestic construction market is still slow.

The plant will keep more than 80% of the peak operation through the first half of fiscal 2010. The plant expects securing profit for the period under higher operation rate and higher export price. The plant, however, concerns the demand is still uncertain for the second half year when the demand could peak out for automobile and construction while the demand for energy industry will recover.

The firm tries to improve the profitability even at severe business condition when energy related demand is sensitive to economy trend and the demand impacts heavily on the profitability of the plant. The plant will improve the productivity and efficiency of the plant operation while the plant seeks better products mix for better profitability.