Japanese steel giant Nippon Steel during an analyst call has signaled lesser focus on steel exports from Japan. Nippon Steel’s CFO Mr Takahiro Mori told “We assume that the spread on export spot market sales will stay at an extremely low level as in 2Q. Although we think that weather factors may slightly push up material prices, this effect can be eliminated if we focus on the spread, which affects earnings. In terms of profit management in domestic steel business, we have a harsher view on the exchange rate, assuming JPY 140 per dollar for both 3Q and 4Q. Based on recent market developments, the price of coking coal may fall below the expected price, which may push up earnings.”Mt Mori said “The depreciation of the yen would worsen profits in the domestic steel business but have a slightly positive impact on a total consolidated basis. Therefore, even if the yen appreciates to JPY 130 from our assumed rate of JPY 140, our overall consolidated business profits should not change significantly. If the price of coking coal continues to be around USD 200, the positive effect of spread upswing in the domestic steel business would be greater than the negative effect of lower raw material interests. On the other hand, fluctuation in external costs includes not only the price of coking coal, but also rising energy costs and other factors. Our policy is to fairly share the burden of fluctuations in external costs across the overall supply chain. We are therefore not considering raising profit by an increased spread resulting from changes in raw material prices. However, conceivably, that is exactly what could happen over the short run, if actual external costs go down.”
Japanese steel giant Nippon Steel during an analyst call has signaled lesser focus on steel exports from Japan. Nippon Steel’s CFO Mr Takahiro Mori told “We assume that the spread on export spot market sales will stay at an extremely low level as in 2Q. Although we think that weather factors may slightly push up material prices, this effect can be eliminated if we focus on the spread, which affects earnings. In terms of profit management in domestic steel business, we have a harsher view on the exchange rate, assuming JPY 140 per dollar for both 3Q and 4Q. Based on recent market developments, the price of coking coal may fall below the expected price, which may push up earnings.”Mt Mori said “The depreciation of the yen would worsen profits in the domestic steel business but have a slightly positive impact on a total consolidated basis. Therefore, even if the yen appreciates to JPY 130 from our assumed rate of JPY 140, our overall consolidated business profits should not change significantly. If the price of coking coal continues to be around USD 200, the positive effect of spread upswing in the domestic steel business would be greater than the negative effect of lower raw material interests. On the other hand, fluctuation in external costs includes not only the price of coking coal, but also rising energy costs and other factors. Our policy is to fairly share the burden of fluctuations in external costs across the overall supply chain. We are therefore not considering raising profit by an increased spread resulting from changes in raw material prices. However, conceivably, that is exactly what could happen over the short run, if actual external costs go down.”
