Japan 4 Major Steels on Track for 3-Year Targets

Japanese major 4 steel makers including Nippon Steel and JFE Steel make wide step in fiscal 2006 ending March 2007 to financial targets for the final year of the mid-term plan to fiscal 2008. They expect their profits excluding onetime items increase in fiscal 2006 when they try to keep the stable supply of high valued steel products under firm demand from manufacturers at home and abroad. The steels, which were vulnerable for cyclical change, are on the strategy for sustainable growth when they increase sales and profit for 4 years in a row. Japanese raw steel output increased by 2.2% to 58.05 million tonnes in the first half year to September, which was third high as the first half, from same period of 2005. The domestic steel consumption increased by 2% to around 39 million tonnes under firm demand for manufacturers including automobile and shipbuilding while the export increased by 9.5% to 18.04 million tonnes with lower yen rate and favorable economy condition worldwide. Steel price was also stable generally. They kept higher sales and profit with higher volume, higher price and cost cutting effort despite of cost up for raw materials including zinc and crude oil. Nippon Steel and JFE Holdings secured actual higher profit for the first half from excluding onetime items including inventory valuation profit in 2005. Sumitomo Metal Industries and Kobe Steel posted record consolidated recurring and net profit. The market condition is expected to keep favorable for the steels in the second half year when domestic manufacturers plan high level production and housing and nonresidential building demand will be firm despite of concerns for slower US economy and extra higher steel output in China. Asian steel market price, which impacts on export price of Japanese steels, is expected to be more stable than 2005. Japanese major steels have revised the profit forecasts upward again and again for fiscal 2006 under the condition.