Japan Electric Furnaces Suffered from Lower Selling Price in April-June

Japanese major 6 electric furnace steel makers including Tokyo Steel Manufacturing posted recurring loss for April-June and other 4 makers posted year-on-year lower recurring profit. They were suffered from lower selling price and higher ferrous scrap cost. Meanwhile, 11 makers posted year-on-year higher net sales thanks to the volume increase. Compared with January-March, shaped steel makers could gain relatively favorable results while rebar makers couldn’t increase the sales.

Averaged Return on Sales lowered by 7.9 points to 7.5% among 5 makers those who posted recurring profits for April-June 2009 and 2010. All 13 makers forecast higher sales for a full year of fiscal 2010 ending in March 2011, 7 makers of which expect for year-on-year higher recurring profits while 6 makers estimate lower profits.

Ferrous scrap price maintained higher than 35,000 yen per tonne for April-June 2010 though the price was 15,000-25,000 yen in the same period of 2009. Ferrous scrap purchase price surged by around 20,000 yen to 38,000 yen per tonne at Tokyo Steel and by 15,800 yen at Kyoei Steel from a year earlier.

Tokyo Steel’ sales volume increased by 40% to 555,000 tonnes from a year earlier. Godo Steel’s sales volume increased by 48% to 288,000 tonnes. They raised selling price for shaped steel while took a time for rebar price hike. Tokyo Steel’s average selling price upped by 2,700 yen to 70,500 yen per tonne from a year earlier.

The 10 makers revised their financial forecasts for the first half of fiscal 2010. Most makers forecast higher earnings when ferrous scrap price is lower than previous expectation. As for a full year results of fiscal 2010, most makers set their forecasts unchanged since supply and demand balance is unforeseeable for raw materials and steel products in the second half year.