Japan 5 Major Steels Post Strong Profit for 1H

Japanese 5 integrated steel makers posted favorable results for half year to September by Tuesday when Sumitomo Metal Industries, Kobe Steel and Nisshin Steel reported the results. Nippon Steel and JFE Holdings reported the results were actually higher than same period of 2005 without onetime gain from inventory valuation though they posted lower profit. Nisshin Steel was suffered from higher nickel and zinc price. Sumitomo Metals posted 18.3% higher consolidated recurring profit at record 156 billion yen for the first half from same period of 2005. Kobe Steel reported the profit increased by 2.3% to record 87.3 billion yen. Nisshin Steel posted 44.7% lower profit at 21.9 billion yen. Sumitomo Metals expects the recurring profit will reach record 300 billion yen for the full year. Kobe Steel said the profit is 170 billion yen as last year. Nippon Steel and JFE Holdings also expect the profit is near the record level in last year under firm demand for high valued steel products at home and abroad. Sumitomo Metals posted record profit in both consolidated recurring profit and net profit for the first half when the firm tried to increase the output of steel products to meet higher demand from automobile and energy industry along with higher selling price of seamless pipe and higher profit from affiliates. The firm plans 1.15 million tones of seamless pipe sales for the full year compared with 580,000 tonnes in the first half. Kobe Steel increased the consolidated recurring profit by 1.9 billion yen for the first half from same period of 2005. The firm enjoyed firm steel demand from domestic manufacturers along with higher sales for titanium and castings and forgings. The sales, recurring profit and net profit were the record. The steel unit’s profit was actually flat as first half of 2005 without 23 billion yen of onetime gain though the profit decreased by 23.5 billion yen. Nisshin Steel posted 11.7 billion yen of lower consolidated recurring profit for the first half from same period of 2005 partly due to 15 billion yen of higher cost for raw materials and energy. The firm expects the demand keeps firm for automobile, building and appliances. The firm estimates the cost increases by 23 billion yen for raw materials and energy in second half from first half while the higher price and volume and better products mix lifts the profit by 25 billion yen.