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Steel News February 07, 2023 03:50:07 PM

Japan’s JFE Holdings Cuts Full-Year Steel Output, Profit Estimates

Paul Ploumis
ScrapMonster Author
For the current year, JFE expects average product prices to rise to 131,000 yen a tonne, against 103,700 yen a year earlier.

Japan’s JFE Holdings Cuts Full-Year Steel Output, Profit Estimates

SEATTLE (Scrap Monster): Japan's second-biggest steelmaker JFE Holdings Inc 5411.T lowered its forecasts for crude steel output and full-year profit on Monday, blaming slack overseas prices and weak demand at home.

"We have been facing a tough environment since last quarter with slow activity in Japan and delays in recovery in overseas markets," JFE Holdings Executive Vice President Masashi Terahata told a news conference.

Given weaker demand, JFE slashed its crude steel output plans to 24 million tonnes for the year to March 31 from 25 million, and lowered its net profit estimate by 5 billion yen to 150 billion yen ($1.1 billion).

For the nine months to Dec. 31, net profit fell 35.5% to 144 billion yen.

"Despite lower output and slumping metal spread in China, we managed to improve our spread by raising product prices to pass on soaring expenses," Terahata said.

For the current year, JFE expects average product prices to rise to 131,000 yen a tonne, against 103,700 yen a year earlier.

South Korean rival POSCO Holdings 005490.KS last month reported a 46.7% drop in operating profit for 2022.

JFE also said it would invest 50 billion yen to boost production capacity of electrical steel sheet, used in electric vehicles (EVs), at its Kurashiki plant in western Japan.

That follows its 2021 decision to spend 49 billion yen to double capacity at the plant. After the second expansion is completed by March 2027, output capacity will triple from current levels.

"We want to take various measures to bolster output as demand for high-grade non-oriented electrical steel sheets used in EVs is expected to grow strongly," Terahata said.

JFE is also studying the feasibility of a joint venture in India with partner JSW Steel JSTL.NS to produce electrical steel sheets used in power plant transformers, he said.

Courtesy: www.reuters.com

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