JFE Steel’s Stainless Sector Shows Concern on Asian Price Competition and Expectation for Car Output Recovery

Mr. Shigeru Ogura, head of JFE Steel’s stainless steel sector, explained at an interview with Japan Metal Bulletin that the sector maintained the production level at 90% for April-June 2011 compared with the pre-disaster peak while the export market worsened. He analyzed Chinese and South Korean stainless steel makers are increasing productions of chrome series stainless steel sheets. He said regional price competition is currently tougher than ever for chrome series products, SUS430, in Asia. As for the impact of strong yen trend against US dollar, he explained positive and negative effects are presently balanced for raw material import and stainless steel product export but the profitability would worsen if yen exchange rate more rises.

Mr. Ogura also referred to tariffs on stainless steel products between China and Taiwan. Taiwanese stainless steel makers will become able to export cold rolled stainless steel coil bound for China with no trade tax in 2012 as well as no-tax export of hot rolled stainless steel coil. He showed a concern on severer price competition in Asian market while represented an expectation for demand recovery from automobile industry in the last half of fiscal 2011 ending in March 2012. Chrome series stainless steel products are used majorly for automotive exhaust system.

He summarized domestic stainless steel market conditions in fiscal 2010 ended in March 2011. The sector’s production of automotive chrome series stainless steel sheet hit the peak for July-September 2010 and turned to decrease in the second half year due to back action of high automobile production in the first half year. Japan Earthquake in March also impacted the demand. The sector’s output kept yearly 500,000-tonne pace through fiscal 2010 and the export, mainly hot coil, accounted for a half of the total production. He described the export profitability turned worse toward the end of the financial year along underlying trend of strong yen.

Under the business circumstances, Mr. Ogura said JFE Steel cautiously seeks chances and timings to exchange information with overseas stainless steel makers, build relationships and transfer productions or technologies to overseas. As for possibilities to establish local operation sites in China or India, Mr. Ogura said the demand for chrome series stainless steel sheet is expected to expand in China along car market growth. Meanwhile, in India, the current demand is mainly for manganese series products despite of large potential demand for chrome series products.

As for the sector’s agenda, Mr. Ogura explained the sector recently started to improve raw material usability, for example, using low grade raw materials including chrome ore. He also referred to development of molybdenum-free chrome series products, JFE-TH1, in the previous year. The product is now under the users’ certifications. He stated the sector develops new products, reduces productive costs and cultivates skills over next ten years, especially eyeing environment and energy fields.