Low Demand Hits Japan Electric Furnace Carbon Steel Makers’ Results

Japanese major 12 electric furnace carbon steel makers posted lower sales for April-December 2009 from same period of 2008. Tokyo Tekko, Hokuetsu Metal and Toyohira Steel posted higher recurring profit while Topy Industries posted recurring loss and other makers reported lower recurring profit under lower demand and lower selling price. The all makers expect lower sales for fiscal 2009 ending March 2010 from fiscal 2008. Tokyo Steel Manufacturing expects recurring loss while Toyohira Steel expects higher recurring profit. Other 10 makers will post lower recurring profit.

Tokyo Steel reported the steel selling price was averaged 44,600 yen per tonne in April-December 2009 from 63,600 yen in the same period of 2008. Kyoei Steel reported the price decreased by around 30,000 yen and Godo Steel recorded the price decreased by 29,614 yen. Tokyo Tekko’s selling price decreased only by 15,000 yen thanks to the value added joint of concrete reinforcing steel bar.

Tokyo Steel’s steel sales volume decreased by 44.6% to 1.235 million tonnes in April-December 2009 from same period of 2008 and the export was 94% lower at 16,000 tonnes. Godo Steel’s sales volume decreased to around 430,000 tonnes or 41.8% drop and Kyoei Steel reported 21.1% lower sales at around 290,000 tonnes. The sales volume is likely to decrease more in January-March while ferrous scrap cost increases.

The six makers of the 12 makers revised the full year profit target downward for fiscal 2009 due to higher scrap cost and lower sales volume. Some makers loose money in monthly basis. Their margin control could critical for the profitability while the makers try to increase the selling price in January and February.