Lower Scrap Cost Supports Japan Major Electric Furnace Steels’ Results

Japanese 12 electric furnace carbon steel makers posted better results in October-December 2011. Wider margin between ferrous scrap cost and steel selling price contributed to the better results. Nine of them secured recurring profit in April-December while Tokyo Steel Manufacturing, Nakayama Steel Works and Asahi Industries posted recurring loss.

Domestic concrete reinforcing steel bar demand recovered in October-December due to redevelopment around Tokyo and rebuilding activity in the earthquake damaged areas. The section demand was slow when steel structure building demand kept slow.

Scrap cost was averaged 30,500 yen per tonne for H2 grade around Tokyo in October-December, which was around 500 yen higher than the level in same period of 2010 and 4,000 yen lower than July-September level. Six makers of them improved the recurring profit rate on the sales.

Tokyo Steel and Nakayama Steel Works expect recurring loss for fiscal 2011 while other 10 makers expect the profit. The demand in January-March is firm for rebar and the shape demand is expected to increase for rebuilding activity.

Scrap market shows sign to hit bottom. The makers’ margin could decrease due to the higher scrap cost. The makers also would face higher electricity cost when local power company in Tokyo announced major power price hike for April.