October 12, 2008

Japanese steel makers downbeat in 2008

Reuters reported that Japan's top two steel makers, Nippon Steel Corp and JFE Holdings Inc will likely forecast double digit percentage falls in profit for the business year that began this month due to soaring costs.

A Nippon Steel spokesman earlier this month said that costs for the entire Japanese steel industry could now balloon by more than JPY 3 trillion in 2008. Many analysts said although Japanese steel makers are likely to lift their forecasts over the course of the year as their price talks with carmakers and other clients progress, they probably won't hike prices fast enough to cover such cost rises,.

Mr Takashi Aoki senior fund manager at Mizuho Asset Management said that "The cost increases are such that it would take them two years to fully pass the costs on to end users. We expect profits to start rising again in the following business year, when costs will come down and prices will remain strong."

But China's No 1 steel maker, Baoshan Iron & Steel Co Ltd stung by a plunge in stainless steel sales last year, could see a 37% jump in profit for calendar 2008 helped by stable prices of nickel, a key ingredient in stainless steel.