News Room - Steel Industry

Posted on 07 Mar 2008

Nippon Steel lowers earnings estimates on rising materials costs

Nippon Steel Corp., the nation's largest steelmaker, said Thursday it expects to see its first drop in profit in five years because of sharply rising prices for raw materials. 

Executive Vice President Kiichiro Masuda said that although demand for steel is expected to remain healthy for the time being, it is likely the unprecedented prices for the materials needed to make it will continue to hurt steelmakers.

"If the current situation continues, high raw materials prices are expected to cause damage worth a total of over ￥2 trillion" to Japan's steel industry, Masuda told a press briefing.

For business 2007 ending March 31, Nippon Steel is now projecting a consolidated net profit of ￥347 billion, down 1.2 percent from the year before, and a consolidated operating profit of ￥545 billion, down 6.0 percent.

In October, the steelmaker projected a net profit of ￥365 billion and an operating profit of ￥580 billion.

"Our costs have increased much more than we anticipated," Nippon Steel said in a statement, blaming surging prices for fuel and raw materials, especially scrap steel. Spot prices for coking coal after January's torrential rain in Australia were also a factor.

The company, however, raised its sales projection to ￥4.8 trillion from ￥4.75 trillion on strong demand, especially in emerging countries. The latest projection represents an 11.6 percent jump from the previous year.

Explosion hurts three

NAGOYA (Kyodo) An explosion occurred Thursday at a Nippon Steel Corp. iron mill in Tokai, Aichi Prefecture, injuring three workers, police said.

Firefighters said one of the three men was seriously injured and two others sustained light injuries. All are conscious.

The explosion occurred at around 4 p.m. in a facility used to dispose of hydrochloric acid used to wash iron sheets, company officials said.