Japan’s second largest steel producer, JFE Steel, announced its second quarter results for the fiscal year (FY)’21-22 (Apr’21-Mar’22).
Highlights:
- Crude steel output: Standalone crude steel output increased by 3.2% q-o-q to 6.45 million tonnes (mn t) in Q2FY’21-22. In H1FY’21-22, the same stood at 12.70 ,mn t, slightly less compared to the company’s forecast of 13 mn t.
Consolidated crude steel production amounted to 6.80 mn t, a 3.1% increase in Q2FY’21-22. - Steel product shipments: Standalone steel shipments were recorded at 5.56 mn t, up 5.7% q-o-q in Q2. In H1, total standalone steel shipments stood at 10.83 mn t, lower than the company’s forecast of 11.40 mn t.
- Exports ratio in Q2 was 49.3% and that in H1 was 46.5% of the total steel shipments.
Financial results in H1FY’21-22
- Profit increased significantly to JPY 198 billion ($1.74 billion). Strong demand for steel and high market prices amid continuous recovery of the global economy since H2FY’21 led to a significant increase in profit, particularly in the steel business.
- Revenues rose to JPY 1,942.9 billion ($17.13 billion).
- Segment profit amounted to JPY 193.2 billion ($1.70 billion), up y-o-y.
- Segment profit in the steel business is expected to be JPY 280 billion ($2.46 billion), the same as the previous forecast. Initiatives to improve steel prices are expected to be executed significantly even in the face of soaring raw material prices, while metal and scrap prices are expected to push up production costs.
- The company’s overall profit is expected to improve by JPY 10 billion ($88.17 million) from the previous forecast.
Market overview
- Domestic steel demand is expected to be strong particularly in the manufacturing industry. Steel demand is expected to continue the recovery trend.
Outlook for domestic steel consumption in Q3FY’21-22 may increase by 1% y-o-y and by 4.6% q-o-q. - Automobile: Automobile production in this fiscal has been revised downward to approx. 8.2 million units from the previous forecast due to the supply shortage of parts and semi-conductors. However, production volume is expected to increase from H1 to H2.
- Shipbuilding: Orders for new ships are increasing along with the increase in both cargo movement and chartering market amid the recovery of the global economy. The number of orders which have already been bagged almost touches the pre-pandemic level.
- Other manufacturing: Demand for construction equipment used for infrastructure and housing stays strong. Industrial machinery also remains strong due to the increasing capexin industries such as semiconductors and EV.
- Civil engineering: Steel demand in the public sector remains strong and is expected to be on par with the previous fiscal year. Demand is expected to increase in H2 due to seasonal factors.
- Building: Development projects, large-scale projects and distribution warehouses are steadily proceeding. Middle-scale projects are also taking off.
Target for FY21’22 stays intact
JFE Steel has kept crude steel production target unchanged at 26.50 mn t for this fiscal (FY’21-22). Crude steel output is expected to increase and further cost reduction is anticipated in H2. Steel demand is expected to recover moderately amid the global economic recovery. Production volume is expected to increase to 13.80 mn t in H2 along with the completion of Kurashiki No.4 BF refit.
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