Nippon Steel Says Profit Could Exceed Forecast
TOKYO: Nippon Steel Corp’s annual profit could exceed the company’s recent sharply revised forecast, a senior executive told Reuters, as steel prices outside Japan continue to recover due to strong demand as iron ore prices have plunged.
Earlier this month, the world’s fifth-largest steelmaker raised its annual profit forecast by 54%, as strong global demand pushes up steel prices and the profits of its units in India, the United States and the United States. Brazil.
“Our overseas businesses exceeded our expectations in July and August,” Executive Vice President Takahiro Mori said in an interview last week.
“The situation in the United States is better than we expected, which could be a factor in improving our performance. “
The Japanese company expected the US steel market to peak in July, but it remained tight with hot coil prices remaining above US $ 2,000 (RM8,320) per tonne, said Mori.
Falling iron ore prices are also providing support, he said.
Prices for iron ore, a key ingredient in steelmaking, peaked above US $ 230 (RM 957) per tonne in May and fell to US $ 140 (RM 582) this month due to a resumption of production in Brazil and a stronger stance on emissions in China.
“Prices may recover slightly, but not above US $ 200 (RM832) per tonne,” Mori said.
Nonetheless, the slowdown in production by automakers poses a risk to the outlook for steelmakers.
Toyota Motor recently announced that it will cut global September production by 40% from its previous plan due to a global chip tightening, although it has maintained its annual sales and production targets.
“The impact on our bottom line will be limited as automakers have said they will offset production cuts later this fiscal year,” Mori said.
In Japan, steelmakers have failed in their biannual price negotiations in recent years to agree on higher product prices with major local industry customers such as Toyota to pass on rising material and cost costs. other expenses.
Nippon Steel has taken an unusually strong stance, publicly declaring that if conditions are not agreed upon for the steelmaker to ensure appropriate margins internationally, it may no longer guarantee a stable supply.
“Mutual understanding is advancing,” Mori said, suggesting that progress was being made. – Reuters