Sumitomo Metal Industries’ director Shinichi Miki said Kashima works will produce more than 4 million tonnes of raw steel for second half of fiscal 2011 ending March 2012 or near the peak in first half of fiscal 2008. The output could be impacted by slower demand caused by Thai flood and slower export under high yen rate. The works improves the operation rate under strong demand for high grade steel products in automobile, shipbuilding and energy industry.
The works tried to normalize the operation after damage by the major earthquake. The works’ 2 blast furnaces recovered normal operation in May while the firm finishes remaining rebuilding works in 2012. Mr. Miki said domestic sheet steel demand is strong in second half of fiscal 2011 when automakers and other manufacturers try to cover lower production in the first half. He recognizes building demand hit bottom and recovers for building and the quake related rebuilding activity while the other domestic demand and export is slow. Mr. Miki said the international competition gets severer for middle or low grade steel due to capacity expansion in South Korea along with higher yen rate. He emphasized historical high yen exchange rate is huge disadvantage for Japanese manufacturers while the steel industry can cancel a part of the impact in raw materials purchase side. He said Sumitomo Metals cannot avoid severe competition in export market. The firm’s export rate would decrease to 37% for fiscal 2011 from around 40% for flat rolled steel in fiscal 2010. The rate would decrease to less than 10% from around 15% for construction steel while the rate would increase slightly to 53% for plate. Mr. Miki said Vietnamese joint venture, China Steel Sumikin Vietnam Joint Stock Company started the plant construction with around 20 professionals from Sumitomo Metals. He said Sumitomo Metals offers higher level of technology for Bhushan Steel’s integrated steel works in Orissa, India. He expects Sumitomo Metals can supply Sumitomo Metals’ products in India through original equipment manufacturing at Bhushan Steel by end of the year depending on final stage of approval process by the users. He said Thai plate joint venture will start operation in 2013. Mr. Miki said the firm improved production cost of electric furnace steel making subsidiary’s plant in Wakayama, Japan. The plant stopped pig iron purchase to use only ferrous scrap for better competitiveness. He said the subsidiary focuses on high grade products at Kashima plant. Mr. Miki said the firm is working to use low cost raw material more when iron making raw materials’ cost is much higher than the level years ago. He indicated the firm could study offshore business options including direct reduced iron plant and electric furnace as a part of effort for competitive low cost steel making process. The firm tries to increase steel performance in combination of material, processing, structure design and valuation technology. Mr. Miki said the firm got order of 1,800 mega pascal class sheet steel with hot press process from Mazda Motor. Sumitomo Metals is working on high quality plate development for energy industry. The firm tries to seek new application of light H-beam other than prefabricated house.
