Japan: EAF mills earnings show mixed trend in Apr-Sept'21

The profits of Japanese electric arc furnace makers were largely mixed from Apr-Sept'21. During this period, four long product companies witnessed a decline in profits, while four others incurred a loss.

The profits of the four companies, including thin plates and section steel makers, increased significantly due to a surge in overseas hot-rolled coil prices. Since the rate of price increase varied across finished items, the profits of each company also varied widely, according Japan Metal Daily.

Apr-Sept steel demand high, sales higher y-o-y

Demand for steel in Apr-Sept'21 was high while sales were higher y-o-y in this period. Tokyo Steel's sales of steel sheets accounted for 56%, which is more than half of its total sales as exports increased mainly in hot-rolled coils.

As raw material prices soared, mills focused on raising their prices but the increase varied across items. The price increase, compared to the same period of the previous year, was 25,600 yen for Tokyo Steel, 20,800 yen for Nakayama Steel, and 18,000 yen for Osaka Steel.

Tokyo Steel prices rose by 4,100 yen and Ito Steel Works by 8,300 yen, limiting the price increase of rebar manufacturers in the Kanto region.

The purchase price of ferrous scrap was 49,000-50,000 yen, which is 25,000 yen to 26,000 yen higher than the price in the same period of the previous year.

As a result, metal spreads reduced compared to the same period of the previous year to 400 yen for Tokyo Steel, 5,800 yen for Nakayama Steel and 8,000 yen for Taito Special Steel.

The reduction was relatively small as the above mentioned three companies increased their profits through cost improvement.

On the other hand, Tokyo Steel's spread shrunk to 2,400 yen and Ito Steelworks to 15,000 yen. Chubu Steel Plate, a heavy plates manufacturer, also saw a decline in profits owing to a surge in raw material prices.

Yamato Steel and Tokyo Steel recorded double-digit profits. Although Yamato's operating profit declined, recurring profit increased as overseas investment income increased.

Nine out of ten companies revised their forecast for the Mar'22 period. Tokyo Steel, Nakayama, Yamato, and Chubu Steel raised their sales and profit forecasts, while Kyoei Steel and Godo Steel lowered their operating profit forecasts, thereby reflecting the challenges being faced by rebar manufacturers.