Japan: Nippon Steel's crude steel production rises slightly q-o-q in Q3FY'23

Japan's leading steelmaker, Nippon Steel, has released its financial results for the October - December 2023 period (Q3FY'23). The company reported a slight increase in non-consolidated crude steel production and steel shipments in the quarter.

Highlights:

Non-consolidated crude steel production: The company's non-consolidated crude steel production stood at 8.84 million tonnes (mnt) in Q3FY'23, marginally up by 1% compared with 8.76 mnt in the previous quarter. Production inched up by 3% y-o-y as against 8.59 mnt in Q3FY'22.

Moreover, consolidated crude steel production edged up by 2% y-o-y in Q3FY'23 compared to 10.04 mnt in Q3FY'22.

Non-consolidated steel shipments: Non-consolidated steel shipments edged down by 2% q-o-q to 7.95 mnt. However, steel shipments remained range-bound y-o-y compared to 7.98 mnt in the same period last year.

Profit decreases in Q3: The steel major's consolidated profits decreased by 19% q-o-q to JPY 198.1 billion ($1.32 billion) in Q3 against JPY 245.5 billion ($1.64 billion) in the same quarter last year. The company has mentioned that profits for FY'23 are expected to be JPY 800 billion ($5.35 billion) or more.

Sharp cost hike due to soaring coking coal prices, yen depreciation: The soaring price of coking coal and the rapid depreciation of the yen have sharply increased the cost of raw materials for steel producers, especially in Japan. Indian companies continued to purchase coking coal on the spot market, while Chinese companies continued to produce high levels of steel. This has led to a decoupling of prices of commodity-grade steel products from prices of raw materials. As a result, the Japanese steel producer is facing sharp increases in their raw material costs.

Outlook:

The company is committed to creating a business structure that delivers sustainable profitability even in challenging market environments. This forms the foundation for their next phase of growth towards achieving 100 mnt and JPY 1 trillion ($6.69 billion). To achieve its vision to increase global crude steel capacity, the company plans to expand AM/NS India and pursue mergers and acquisitions, equity participation, and expansion of existing steel mills.