Nippon Steel sees no recovery in Asia steel prices before April
Reuters , 8 Aug 2015 17:28
(Minews) - Nippon Steel & Sumitomo Metal, the world's No.2 steelmaker by output, sees no recovery in Asia's sagging steel prices at least until April as exports by top producer China will continue to weigh on the market, a senior executive said.
The global steel industry has been battered by massive exports of cheap steel from China, where an economic slowdown has curtailed domestic use of the metal.
"I don't expect to see a recovery in Asia's steel product prices at least during the October-March second half (of the fiscal year)," Executive Vice President Katsuhiko Ota told Reuters in an interview this week.
Still, Japanese steelmakers have held up better than some rivals abroad as a weaker yen spurs the country's automakers to shift some production back home.
Nippon Steel said last week its recurring profit - pre-tax before one-off items - rose 14 percent in the April-June quarter from a year ago as lower raw material costs boosted margins, still forecasting an 18 percent drop in annual profit.
In contrast, many mills in the region are losing money.
"About half of Chinese mills apparently are making losses, but they are not stopping production," Ota said.
China's steel association said last month 43 percent of its members lost money in the first half of this year, with the sector as a whole struggling with plummeting demand and local prices at 20-year lows.
"We don't expect an improvement any time soon as the Chinese government is trying to promote exports, rather than stopping or slashing overcapacity," Ota said.
As a result, Nippon Steel, which exports nearly half of its production, expects no major recovery in its export margin by March, he said.
Ota was more bullish on his company's home market.
"Domestic demand will pick up in the October to March half on higher vehicle output, increased orders of public works and a recovery of capital expenditure by the private sector," he said.
Ota was also optimistic about Nippon Steel's own businesses in China, where it has about 30 joint ventures, including Baosteel-NSSMC Automotive Steel Sheets (BNA), which makes automotive flat steel and galvanized steel sheet.
"Unless China's car production and sales fall sharply, our business will not be affected that much," he said, citing little competition to its high-end galvanized steel sheet.
Ota was concerned, however, that moves by U.S. counterparts seeking antidumping actions against China and other countries over cheap exports of corrosion-resistant steel as well as cold-rolled steel could end in import duties.
And any import duties imposed in the United States could force Chinese steelmakers to ship more products to an already-swamped Asia, he said.
Chinese steel prices hit their lowest in more than 20 years last month as demand in the world's top producer wanes, industry data shows.
Rebar on the Shanghai Futures Exchange hit 1,951 yuan ($314) a tonne last month, lowest since the contract's launch in 2009. It has lost nearly 25 percent so far this year.
Story Code: 26721
News Link: http://www.minews.ir/en/doc/news/26721/nippon-steel-sees-no-recovery-in-asia-steel-prices-before-april