Tokyo Steel Manufacturing, Japan’s major electric-arc-furnace steel producer, recorded a 32.7pc increase in its steel product output Q1 FY2022 (April-June). Steel output in Q1 was 697,000mt against 525,000mt in Q1 FY2021, according to the company’s Q1 results update.
In the global market, the iron ore shortage situation has not been fully resolved, and the supply and demand of steel materials have remained tight in the domestic market. However, demand for steel products is expected to remain firm due to construction work and a pick-up in private capital investment, stated the company release.
High ferrous scrap purchase prices and electricity costs continue to keep input costs high. Despite this, high finished steel prices in Q2 amid Obon holidays are expected to expand margins and boost profits further.
Tokyo steel’s total steel product sales rose to 633,000mt in Q1, up by 12.2pc from the prior year. The average unit price for the steel products rose to JPY81,500/mt in Q1, which is JPY17,700/mt ($161/mt) higher than JPY63,800/mt in the previous year.
Steel exports grew to 165,000mt, up by 8.55pc from a year ago. The average unit price for exports was JPY83,400/mt ($756/mt), up by JPY32,500/mt ($296/mt) from the prior year.
In Q1, the rapid recovery of steel demand in the overseas markets outpaced supply pushing steel prices to new highs. The domestic market also showed an uptrend.
The average purchase price of ferrous scrap, a key raw material for the company, exceeded expectations reaching over a decade’s high. However, strict cost reduction efforts raised Q1 profits above expectation, said a company official.
In Q1, gross profits rose to JPY7,565mn ($68mn), up by JPY218mn ($1.9mn) from the prior year. Operating income was JPY3,715mn, up JPY478mn, while net income was JPY3,634mn against JPY3,136mn in Q1 last year.