Higher Raw Materials Cost Suffers Japan Major Steel Makers

Japanese integrated steel makers are suffered from higher raw materials cost, according to their consolidated results for April-June 2006 announced by Monday. Sumitomo Metal Industries and Kobe Steel posted higher recurring profit and net profit while Nippon Steel, JFE Holdings and Nisshin Steel reported lower profit after they posted one time gain from lower raw materials for April-June 2005. Their results were in line with the original outlook for half year and full year ending March 2007. Sumitomo Metals revised the original outlook of recurring profit by 5 billion yen for half year and by 10 billion yen for the full year to March 2007 when the firm posted higher profit for April-June due to more than 10% increase of seamless pipe price. Kobe Steel posted higher recurring profit for April-June due to inventory valuation gain for aluminium and copper and favorable export of construction machinery. Nisshin Steel posted wide profit drop due to higher sales weight for coated steel and stainless under surging zinc and nickel price. Nippon Steel announced on Monday the consolidated recurring profit decreased by 19.6% to 123 billion yen for April-June and the net profit decreased by 18.4% to 74.7 billion yen with 4.2% higher sales at 942.7 billion yen for April-June from same period of 2005. The recurring profit actually increased by 10 billion yen or 8.8% without 40 billion yen of onetime gain for April-June 2005. Kobe Steel reported the operating profit decreased by 0.9% to 49.7 billion yen with 17% higher sales at 432.9 billion yen for April-June from same period of 2005 while the recurring profit increased by 13.1% to 47.2 billion yen when 4 billion yen of aluminium and copper inventory gain and higher profit from construction machinery export to China contributed to the results. The unconsolidated raw steel output decreased by 1.9% to 7.7 million tonnes for Nippon Steel, by 0.4% to 6.92 million tonnes for JFE Steel, by 0.3% to 3.29 million tonnes for Sumitomo Metals including Kokura, Naoetsu and Sumikin Iron and Steel and by 1.6% to 990,000 tonnes for Nisshin Steel in April-June from same period of 2005 while Kobe Steel’s raw steel output was flat at 1.88 million tonnes. The unconsolidated average selling price of steel products was 71,600 yen per tonne for Nippon Steel, 73,500 yen for JFE Steel, 72,800 yen for Kobe Steel and 114,000 yen for Nisshin Steel while Sumitomo Metals’ price was 95,500 yen at average including the price of Kokura, Naoetsu and Sumikin Iron & Steel.