JFE Steel to Serve Growing Offshore High Grade Steel Demand, New CEO

JFE Steel’s new president Eiji Hayashida said to a reporter of Japan Metal Bulletin the firm seeks sustainable profit growth by following Asian demand for high grade steel products. He said the mission is to be one of the major player in Asian market by establishing unconsolidated 33 million tonnes and consolidated 37 million tonnes of annual raw steel output capacity. He targets more than 200 billion yen of consolidated recurring profit for fiscal 2010 starting April for global strategic investment.

Mr. Hayashida said the firm sees annual 3300 million tonnes of capacity is the most efficient while more than that capacity results in higher investment cost curve. He said the firm seeks higher volume in offshore projects but the firm seeks not volume, but share in Asian market as No.1 supplier of high grade steel products. He said the firm seeks best partner for joint offshore business.

Mr. Hayashida said the firm tries to secure more than 10% of recurring profit for sales for growth investment. He targets more than 300 billion yen of stable unconsolidated recurring profit with 3 trillion yen of sales at 30 million tonnes of shipment with averaged 100,000 yen per tonne of selling price. He said the firm establishes 33 million tonnes capacity in first half of 2011.

Mr. Hayashida said the export rate would be more than 50% of 33 million tonnes of production. He said the firm develops demand in China, Association of Southeast Asian Nations (ASEAN), India and other Asian countries. He said the firm also tries to expand vertical tie-up based export while the export of slab and black plate for rerollers represents near half of the total export. He said the firm at first tries to find opportunity to build downstream operation in Southeast Asia while the firm still seeks the chance to build integrated steel works in Thailand, Vietnam and Philippines. He said the firm studied to join Dongkuk Steel’s Brazil project but the firm needs no slab from Brazil any more and has no intention to take majority for the project.

Mr. Hayashida said the firm expands research and development mainly for sheet steel and automobile applications to keep the technical advantage and to improve the cost competitiveness. He said the firm keeps more than 1% of sales for development investment and could increase more. He said the firm tries to secure 30% of iron ore and coal equity for the requirement while the firm has now only 15%.