Japan’s leading steelmaker, Nippon Steel, has released its financial results for the quarter ending 31 December, 2022 (i.e. Q3 FY’22). The company recorded an increase in crude steel production and steel shipments in the quarter. Crude steel production increased before April and May, but declined from June. However, it increased again from August onwards.
Steel demand declined due to sluggish construction market, restrictions on electricity use, and the disrupted supply chain caused by strict lockdowns.
Highlights:
- Non-consolidated crude steel production stood at 8.59 mnt in Q3FY’22, up 3% compared with 8.354 mnt in the previous quarter. Production fell by 11% y-o-y as against 9.64 mnt in Q2.
- Non-consolidated steel shipments rose 7% to 7.98 mnt in Q3 as against 7.49 mnt in Q2. However, steel shipments dropped by 11% y-o-y compared to 8.96 mnt in the same period last year.
- The steel major’s consolidated profit increased to JPY 220 billion ($1.67 billion) in Q3 versus JPY 202.8 billion ($1.54) in the previous quarter, even in the prolonged sluggish business environment. Also, the forecast to generate consolidated profit of more than JPY 870 billion ($6.63) in the current fiscal remains unchanged as the forecast for total inventory valuations was revised downward by JPY 60 billion ($0.45) due to fluctuations in raw material prices and foreign exchange rates.
Expanding global crude steel capacity to 100 mnt/year: In line with the company’s plans to increase its crude steel capacity to 100 mnt/year, it plans to build integrated steel mills in five key overseas markets and also aims to meet local demand for steel overseas.
The company has commenced its operations at the new EAF in the Hirohata area, which will produce high -grade electrical steel sheets for the automotive industry. It also plans to start up rolling mills 1 and 2 in the first half of the year to improve its production capacity and product quality.
Investment in AM/NS India: The company is benefiting from the investment in AM/NS India by earning profits from the sale of surplus natural gas stocks. In addition, the acquisition of key infrastructure assets at the Hazira plant helps the company stabilize and strengthen its operational production and supply chain.
It also completed the acquisition of ex-Uttam Galva Steels (UG Steels) through the insolvency process, and established AM/NS Khopoli.
Outlook: Japan’s steel demand for civil engineering and construction remains stable, thanks to large-scale construction in urban areas and robust need for non-residential construction starts. As for auto production which was damaged by supply chain disruption, production continues to inch up on a y-o-y basis and demand seems to be recovering. Inventory, too, has gradually been decreasing.
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