Japan Electric Furnaces Post Favorable and Hard Results for F2010

Three of Japanese major 15 electric furnace steel makers posted year-to-year higher non-consolidated recurring profit in fiscal 2010 ended in March 2011. Godo Steel returned to the annual black. Other 3 makers decreased the recurring profit year-to-year and the rest 9 makers posted yearly recurring loss. The main factor was low sales price despite of sales volume increase in fiscal 2010. Ferrous scrap cost averagely increased by 6,000-8,000 yen per tonne. Spread between steel product price and ferrous scrap cost narrowed by around 10,000 yen per tonne.

Six makers didn’t announce annual financial forecasts for fiscal 2011. Three makers expect yearly higher profits for fiscal 2011. One maker forecasts yearly lower profit while six makers expect to return to the annual black.

Building construction activities had maintained slow after Lehman’s fall while hit bottom in fiscal 2010. Thus most electric furnaces could increase the sales volume. Tokyo Steel Manufacturing increased the sales volume by about 30% to 2.18 million tonnes in fiscal 2010 from fiscal 2009. Godo Steel increased the sales volume by 30% to 1.17 million tonnes. Chubu Steel Plate’s sales volume increased by 20%.

Tokyo Steel’ average selling price upped by 5,800 yen to 68,000 yen per tonne in fiscal 2010 from fiscal fiscal 2009. Godo Steel’s average selling price upped by 3,400 yen to 69,900 yen. Daiwa Steel’s average selling price upped by 1,000 yen. Meanwhile, Asahi Industries Group’s selling price downed by 1,000 yen to 62,000 yen and Tokyo Tekko’s average selling price lowered by 7,200 yen to 60,600 yen for Tokyo Tekko. Spread between the product price and ferrous scrap cost narrowed by 9,000 yen at Asahi Industries and by 8,000 yen at Kyoei Steel.

Most makers forecast the selling price would increases to average 65,000-70,000 yen per tonne in fiscal 2011 and the purchase price of ferrous scrap to 35,000-40,000 yen. The spread is forecasted at 25,000-40,000 yen. However, the demand might decrease when consumers’ mind is in downward trend after mega earthquake.