Japan Major Electric Furnaces Post Lower Profit in 1H

Japanese major 14 electric furnace steel makers out of 15 firms posted lower recurring profit for half year to September compared with same period of 2006. They reduced the profit despite of the higher selling price when ferrous scrap cost increased by around 10,000 yen per tonne. Yamato Kogyo posted record profit due to strong result of North American operation. The major 14 makers lower profit for the full year to March 2008 while Yamato Kogyo expects higher profit. Topy Industries and Daiwa Steel posted 12.9 and 40.8% lower recurring profit for the half year from same period of 2006. Topy Industries’ operating profit decreased by 39.7% due to higher raw materials cost. Daiwa Steel reported the profit decreased due to higher cost and sales drop under outage. Tokyo Steel Manufacturing’s scrap purchase price increased to 42,500 yen per tonne for H2 grade at Okayama plant at end of September compared with 38,500 yen in April. The scrap purchase price increased by 11,800 yen for Godo Steel, by 10,800 yen for JFE Bars & Shapes and by 11,000 yen for Kyoei Steel in April-September compared with same period of 2006. The steel selling price increased by 7,000 yen to 69,800 yen per tonne for Osaka Steel in the half year to September from same period of 2006. The price increased by 5,300 yen to 66,200 yen for Tokyo Tekko and by 5,700 yen to 68,730 yen for Tokyo Kohtetsu. Five of them revised the full year earnings outlook downward. They experience tough time when building market is very slow due to transition process for new building standard law. Four of them including Yamato Kogyo revised the outlook upward. However, those electric furnace steel makers could face severer market condition in rest of the year.