Japanese steelmaker Nippon Steel expects domestic demand to recover to the pre-pandemic level in H1 FY2021 (April-September). Japan’s FY2021 steel demand is forecast at 56.5mn mt, according to Nippon’s Q1 results update.
Nippon’s shipments in Q1 rose to 9.2mn mt from 7.12mn mt in the prior-year quarter, H1 shipments are estimated at 18.80mn mt, while estimates for H2 is at 17.7mn mt.
Consolidated crude steel production in Q1 (April-June) increased to 11.18mn mt, up from 8.30mn mt in Q1 FY2020. The production forecast for the full year is 46mn mt. Non-consolidated crude steel production was 10.18mn mt, up from 7.56mn mt in Q1 FY2020. The production forecast for Q2 is at 20.50mn mt and the full year is at 40mn mt.
Despite the expected decline in steel production and shipments in FY2021, the company aims to reach record-high profit post the integration of ex-Nippon Steel and ex-Sumitomo Metals assets. Crude steel production volume will be approximately 20pc below production levels in FY2014, as per the company’s planned strategic cuts. Cost reductions and revision of long-term contractual steel prices could help the company improve its margins.
In Q1, average steel prices rose to JPY97,200/mt ($890.90/mt) from JPY86,000/mt in the prior year. Nippon estimates prices to rise to JPY114,000/mt in Q2 and JPY106,000mt in H1.
Nippon’s consolidated net profit increased to JPY172.31bn in Q1 compared to a loss of JPY41.42bn in the prior-year quarter.