Heat Treat Industry News

January 22, 2010

Kobe Steel Output to Rise to Near Record Levels on China Demand

Kobe Steel Ltd. said output will rise to near record levels last seen before the global financial crisis because demand from China and Southeast Asia is increasing.

Output in the fiscal fourth quarter will rise to as much as 90 percent of Kobe Steel's record production, Hiroyoshi Tsumura, an executive in the company's iron and steel division, said. Production peaked at 2.11 million metric tons in the three months to Sept. 30, 2008.

Kobe Steel, Japan's fourth-largest producer, and other steelmakers here are counting on demand in China, Thailand and Malaysia to offset stagnant domestic growth. The company's ratio of exports will probably rise to a record 28 percent of domestic output this fiscal year, which ends on March 31, Tsumura said.

"The speed of the recovery in the Asian region including China is much faster than in Japan," Tsumura said. "We should consider the Japanese steel industry's home market as not just Japan, but all of Asia."

Japan's steel exports increased for a fourth month in November, rising 34 percent from a year earlier, according to the Japan Iron and Steel Federation.

The demand from overseas is helping boost output and cushion stagnant sales in Japan. Production at Kobe Steel rose to about 85 percent of the peak in the third quarter from as much as 75 percent in the second, Tsumura said.

Kobe Steel said in October it plans to produce 6.4 million tons for the year to March 31.

Japanese manufacturers are curbing capital investment while the Hatoyama administration, under pressure to control spending, is cutting outlays for public works.

Kobe Steel produced 2.88 million tons of crude steel in the first half, 31 percent below the 4.18 million tons of output in the six months to Sept. 30, 2008.

The company had a loss of ¥12 billion in the second quarter that ended Sept. 30, narrowing from ¥33.2 billion in the previous three months, as exports improved and inventories fell. The company had net income of ¥20.9 billion a year earlier.

Bloomberg

Source: The Japan Times online / http://search.japantimes.co.jp/rss/nb20100122n5.html

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