Major 4 steel makers of China, South Korea and Taiwan reported struggling results in 2011. Anshan Iron and Steel of China reported net loss while other 3 makers posted lower net profit. Their steel price increase was smaller for higher raw materials cost under slow demand in each country. The steel demand would improve in 2012 when emerging countries loose money supply. However, international competition gets severer when steel makers shift to export market. Major steel makers’ profitability could keep narrow under high raw materials cost and uncertainty in world economy.
Baoshan Iron and Steel of China posted 40% lower net profit in 2011 from record profit in 2010. The firm cannot cover higher raw materials cost despite of better sales volume and selling price. Anshan Iron and Steel expects around 2.151 billion yuan of net loss in 2011 compared with 2.039 billion yuan of net profit in 2010. The loss increased in October-December due to higher raw materials and energy cost, blast furnace repair outage and lower steel selling price. POSCO of South Korea reported lower net profit in 2011 from 2010 due to higher raw materials cost and lower market price despite of record production and sales volume. China Steel of Taiwan posted lower profit before tax for the first time in 2 years. The firm posted the loss in December 2011 due to lower domestic market price under cheaper import. Chinese major steel makers try to improve the profitability in 2012 through scale up by consolidation, shift to higher valued products, development of offshore project order and contract users and offshore resource investment under severe business condition. POSCO expands production and sales through wider offshore activities. China Steel focuses on offshore business. Japanese 5 integrated steel makers announced lower profit outlook for fiscal 2011 ending March 2012 compared with former outlook by Friday. Nippon Steel expects zero net profit and other 4 makers expect net loss. Their profitability gets severer under slow demand at home and abroad and historical yen rate. The steel makers try to improve the profitability to match Asian rivals. However, their competition should get severer when Asian major steel makers try to develop export market.
