Sanyo Special Steel to Seek Offshore Growth through Technology Advantage

Sanyo Special Steel’s president Nobuyoshi Fujiwara said to Japan Metal Bulletin the firm tries to follow annualized 5% worldwide demand growth for special steel by expanding the supply ability along with better productivity. He said the capital expenditure will increase to 60 billion yen through fiscal 2010, which is 2.5 times of expenditure in fiscal 2005-2007. The firm announced the target of 200 billion yen of sales, 19 billion yen of recurring profit, 11 billion yen of net profit and 9.2% of ROE for fiscal 2010 ending March 2011. The firm tries to improve the corporate value through better brand and higher output capacity. Mr. Fujiwara said the firm increases the sales volume from monthly 80,000 tonnes in fiscal 2007 to 90,000 tonnes in fiscal 2010 after the firm expands the output capacity to 100,000 tonnes level for potential higher demand. The firm adds new continuous caster to increase the steel output capacity while the firm increases the shift from 2 to 3 shifts for 60 tonnes electric furnace. The firm also adds inspection line for bar and wire rod and expands the finishing capacity for pipe making line. Mr. Fujiwara said the firm expends around 30 billion yen for the expansion in the 3 years while the maintenance needs around 10 billion yen. Mr. Fujiwara said the firm tries to improve the presence in the world special steel market by improving the technology advantage. He said the firm will survive the competition with the technology while the firm launches energy and materials saving solution including ECOMAX steel, which is nickel free and molybdenum free high tensile alloyed steel. Mr. Fujiwara said the firm seeks growth opportunity by providing user oriented high performance steel items for offshore market, especially for developing countries. He said the firm expands the offshore business by utilizing the subsidiaries in China, USA, Thailand and Indonesia. Mr. Fujiwara said the firm and Nippon Steel plan monthly 3,000 tonnes of original equipment manufacturing each other, in which Sanyo Special Steel makes bearing steel and Nippon Steel makes mass production steel items for automobile. He said the volume could be monthly 1,000 tonnes in April-September when they try to get users’ approvals for the OEM. The firm started ferrous scrap surcharge mechanism for part of lineup in fiscal 2008 for the first time in Japanese industry. Mr. Fujiwara said the firm started the mechanism with a major user’s request and the reasonable mechanism could work to reflect price change of scrap in certain period. He said the firm tries to expand the mechanism for other users. Mr. Fujiwara said the ferrous scrap cost increase is beyond the own cost cutting effort. He indicates the firm could increase the selling price for June and could increase the price additionally later depending on the cost factor after the firm increased the price by 15,000 yen per tonne for April.