Posted on 10 May 2022
Japan’s JFE Steel produced 25.88 million mt of crude steel on a standalone basis for the year ended March 31, 2022, up 13.7% from 22.76 million mt made the year before, the company said May 6, just shy of its projection of 26 million mt.
It attributed the increase to “strong demand for steel and the result of initiatives to improve sales price led to a significant increase in profit, particularly in the steel business,” it said.
As a result of the positive factors, JFE swung to a net profit of Yen 288 billion ($2.2 billion) for the year, from a net loss of Yen 21.8 billion the previous year.
JFE did not provide a financial projection for the year ending March 31, 2023, citing Russia’s invasion of Ukraine.
“Since Russia launched its invasion, coal prices have remained volatile and steel supply/demand and market conditions have been uncertain, obliging the company to determine that it cannot issue reasonable forecasts at this stage,” JFE said.
However, the steelmaker expects to produce 26 million mt of crude in the current fiscal year, citing “a projected recovery in automobile production and a pickup in the economy.”
For its annual outlook, JFE said demand from the automotive sector is soft due to low automotive production caused by a shortage of semiconductors. Although the automotive sector “is gradually recovering…its recovering speed is sluggish.”
For instance, Toyota Motor Corp. expects to start its FY 2022-23 with a projected 150,000 vehicle loss in April, and 100,000 vehicle losses in May, citing the chip shortage.
Also, Japan’s Ministry of Economy, Trade and Industry projected that April-June demand for steel products will dip 0.5% on the year to 20.98 million mt, and cautioned that demand could fall further due to the shortage of semiconductors and the effects of the Russia-Ukraine war.
Nevertheless, JFE expects both local and overseas demand for steel to recover as economies recover from the impact of COVID-19.
A “peaking out of COVID-19” will see a recovery in steel demand from the overseas construction sectors, while manufacturing is also expected to rebound.
For its raw material outlook, “the iron ore price is considered to remain at a current high level due to the economic stimulus measures in China,” JFE said.
As for coking coal, “the economic sanction against Russia, the impact of COVID-19 and the Chinese government’s policy…makes the market price forecast..difficult,” it said.
Source:Platts
