Japan: JFE Steel reports 9% y-o-y drop in crude steel production in H1FY'24

JFE Steel, Japan's second largest steel producer, has announced its operational and financial results for the first half of fiscal year 2024 (H1FY'25) on 6 November 2024.

Crude steel output: Standalone crude steel output dropped by 9.29% y-o-y in H1FY'24 to 11.03 million tonnes (mnt) from 12.16 mnt in H1FY'23. Moreover, on q-o-q basis the same fell by 9.30% q-o-q to 5.55 mnt in Q2FY'24 compared to 5.48 mnt in Q1FY'24.

Consolidated crude steel production decreased by 9.03% y-o-y to 11.69 mnt in H1FY'24 against 12.85 mnt in H1FY'23. While, on q-o-q basis the same edged up by 1.5% q-o-q to 5.89 mnt in Q2FY'24 compared to 5.80 mnt in Q1FY'24.

Steel product shipments: Standalone steel product shipments declined by 9% y-o-y to 9.66 mnt in H1FY'24 compared to 10.65 mnt in H1FY'23. However, on q-o-q basis the same increased by 6% q-o-q to 4.96 mnt in Q2FY'24 against 4.7 mnt in Q1FY'24.

Exports share in Q2FY'24 was 44.2% of the total steel shipments. In Q1FY'24, the share was 40.6%.

Financial results

• Profit fell sharply by 50% y-o-y to JPY 81.8 billion ($0.53 billion) in H1FY'24 from JPY 164.3 billion ($1.06 billion) H1FY'23.
  
  
• Revenue dropped by 5% y-o-y to JPY 2,450.7 billion ($15.90 billion) in H1FY'24 against JPY 2,576.5 billion ($16.72 billion) in the same period last year.
  
  
• Segment profit amounted to JPY 72 billion ($0.46 billion) in H1FY'24, down by 54% y-o-y
  
  

Market overview

Automotive demand: Production levels, adversely affected by quality and certification challenges and typhoon disturbances in the first half of the year, are gradually recovering. Nevertheless, this recovery has reached a plateau, despite a relatively stable demand.

Shipbuilding activity: Strong demand has led to a significant order backlog for domestic shipbuilders, ensuring stability for the next three years. However, labour shortages are hindering production, limiting potential growth in steel demand in the near future.

Other manufacturing demand: The construction equipment market is experiencing a downturn in Europe and Asia, while North America shows indications of reaching its peak. Meanwhile, industrial machinery demand remains subdued due to economic uncertainties, including rising interest rates and inflation.

Construction sector: The surge in material costs and labour shortages led to the postponement of large-scale projects, such as redevelopment initiatives, alongside smaller-scale projects. The slowing down has intensified as rising construction costs and interest rates have negatively impacted investment in construction and housing purchases.

Civil engineering: Despite increased funding, rising costs and labour shortages are projected to curtail steel demand and production in FY'24.