Profitability of Coil Centers Recovers Slightly

Coil centers’ profitability has improved slightly due to increased their operation rate and the product price hike around Tokyo. Some coil centers seemed to return to be black in monthly after June when the product price rebounded along with rising ferrous scrap price. However, only the coil centers, which processes the material for hybrid car and other automobile related recovers its profitability while other coil centers processing for construction material post a loss.

The operation rate of coil centers was 49.6% in May while the operation improved for 3 months in a row, according to Japan Coil Center Association. The operation rate of slitter was 61.5% while leveler was 36.5%. Material for automobile or electric appliance is processed by slitter while construction material is processed by leveler.

The operation rate is expected to improve to around 70% for slitter in June while leveler would recover to around 50% due to the demand increase and anticipatory buying.

However, coil center is considered about 80% of operation rate to post a stable profit. Some coil centers, which returned to be black by reduction of the cost and labor. It takes more time for full-scale recovery of profitability when the uncertainty about the construction demand heightens.