Japanese integrated mills to hold steel exports in FY'22

Nippon Steel, Japan's largest steel producer, says its steel export ratio during the current fiscal year ending March 31 will remain unchanged on year at 42% in value terms, despite a slight decline during last quarter, while JFE Holdings, parent company of No.2 maker JFE Steel, expects its ratio to reach 44%, lower by 1.5% from fiscal 2021.

Announcing their October-December quarter results last week, both mills cited prevailing tough conditions though their April-December performances were markedly different, according to their posts. Nippon Steel recorded a 2.4% rise in business profit to Yen 761.8 billion ($5.86 billion) while JFE Holdings suffered a huge 28.4% fall to Yen 231.1 billion during the nine months.

"The ongoing Russian invasion of Ukraine, the Covid-19 pandemic, inflation driven by skyrocketing prices of natural resources, climate change, and violent fluctuations in exchange rates," said Nippon Steel's vice president Takahiro Mori, listing the factors that had impacted his mill's business during the fiscal's first three quarters, while Masashi Terahata, executive VP at JFE Holdings, cited the sluggish domestic market and users refraining from purchasing, as well as slow recovery in overseas markets.

"The business environment will become tougher in the third and fourth quarters," he warned.

Both mills did indeed face headwinds during the first part of the current fiscal year but compared with last year, both enjoyed a large recovery in prices. During the third quarter just ended, for example, Nippon Steel's average steel price was Yen 155,900/tonne - up from Yen 124,400/t during October-December 2021 - while at JFE Holdings, the steel price averaged Yen 136,300/t last quarter, up from Yen 107,600/t a year earlier.

As for exports, "the Yen weakened against the dollar during October-December but (overseas) prices were low so there was no merit for the integrated mills to export," a Japanese market source explained.

Nippon Steel's export ratio last quarter was 41%, down 1 point both on year and on quarter, but its exports of high value-added seamless pipes have been stable, so compared with JFE, the decline in its ratio last quarter was smaller and the full-year result should not change, Mysteel Global was told.

Japan Iron & Steel Federation data show that Japan's exports of seamless pipes and tubes last calendar year surged by 40% from 2021 to reach 248,782 tonnes, as the jump in oil prices amid the Russia-Ukraine conflict led to a rush of energy development projects globally.

JFE Steel was not as fortunate with its product mix - the company is a major producer of large diameter welded pries but Japan's exports of these only rose 9% last year - so its October-December ratio of 41% was down 4.9 points on year and 4 points lower on quarter, its results show.

Both makers are forecasting lower crude steel production for the full year ending March 31, with Nippon Steel's expected to reach 34.2 million tonnes on a non-consolidated basis, compared with 38.7 million during last fiscal, while JFE predicts a total of 25 million tonnes, compared with 25.9 million in fiscal 2021.

October-December crude steel output at JFE was 1.01 million tonnes lower on year at 5.48 million tonnes, the mill's results show. This was almost certainly a consequence of the company stopping the No.6 blast furnace at the Chiba area of its East Japan Works near Tokyo last September for a reline and overhaul. The large 5,153 cubic metre furnace was brought back on stream in mid-January, as reported.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.