Japan Electric Furnaces Suffered High Scrap Cost in April-June

Japanese major 7 electric furnace steel makers including Tokyo Steel Manufacturing posted lower recurring profit for April-June from same period of 2007 while 3 makers posted recurring loss. They were suffered from higher ferrous scrap cost. However, their profitability recovers due to plunging scrap market and surging steel selling price. Five electric furnace steel makers expect higher profit for the full year to March 2009. Yamato Kogyo and Tokyo Kohtetsu posted higher profit for April-June from same period of 2007 thanks to firm offshore operations for Yamato Kogyo and gain from billet export for Tokyo Kohtetsu. Many of the makers are suffered from the market condition. Their selling price increased by around 20,000 yen per tonne or around 40% for concrete reinforcing steel bar in April-June compared with same period of 2007 while the ferrous scrap price increased by around 25,000 yen or more than 60%. Their averaged shipping price is around 85,000 yen per tonne for rebar recently and is expected to reach 90,000 yen in September while scrap price decreased to less than 60,000 yen for heavy grade. The loss making makers could recover profitability as early as in August.