Japan Major Stainless Steels Post 97.3 Billion Yen Recurring Loss

The recurring loss of Japanese 3 stainless steel makers and Nisshin Steel’s stainless steel unit was about 97.3 billion yen for fiscal 2008 ended March 2009. These makers posted the recurring profit for first half of fiscal 2008. However, the loss on revaluation of inventory increased in the second half when the price of raw materials and product kept declining. The revaluation loss based on lower-of-cost-or-market method also enlarged the recurring loss. The shipment was at lower level since late 2008 not only for cold rolled stainless steel but also for stainless plate and high nickel alloy, which is mainly used for projects. The makers except Nisshin Steel estimate to post the recurring profit for fiscal 2009 due to the effort for earnings recovery though all of makers would post recurring loss for the first half year.

The stainless steel makers’ operation kept firm during first half of fiscal 2008. However, the operation rate in the second half was below half of the peak and the rate at the beginning of 2009 was as low as 40% of the peak. The shipment of Nippon Steel & Sumikin Stainless Steel exclusive of subsidiaries decreased by 19% to 823,000 tonnes for fiscal 2008 from fiscal 2007 while Nippon Yakin Kogyo group’s shipment decreased by 21% to 222,000 tonnes and Nippon Metal Industry group decreased by 18% to 274,000 tonnes.

These 3 makers forecast the demand for first half of fiscal 2009 is as same as for second half of fiscal 2008 but the shipment would recover steadily after October 2009 when the inventory adjustment of stainless cold coil is already finished.