Japan's Nippon Steel says solid demand mutes impact of U.S. duties (updated)
21/05/2018 08:12
* Says most of its U.S. customers still buy its products
* U.S. subsidiaries benefit from higher steel prices
* Aims to boost FY18/19 crude steel output to above 42.6 mln
T
(Adds April trade data in paragraph 5)
By Yuka Obayashi and Ritsuko Shimizu
TOKYO, May 21 (Reuters) - Strong global demand has helped
cushion the impact on Nippon Steel & Sumitomo Metal Corp
5401.T of new U.S. import duties, but Japan's top steelmaker
remains worried Washington's trade barriers could lead to a glut
in Asia, a much bigger market for the company.
Japan is among the top 10 steel exporters to the United
States which in March began imposing a 25-percent tariff on
steel imports, aimed at curbing purchases from China.
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"There has been no major impact from the U.S. tariffs thanks
to solid global demand," Nippon Steel Executive Vice President
Katsuhiro Miyamoto told Reuters in an interview late last week.
Nippon Steel, whose U.S.-bound steel cargoes account for 4
percent of its total exports, saw more than 90 percent of its
customers continuing to buy its products even after the tariffs
were imposed because they are specialised products such as rails
and seamless pipes, Miyamoto said.
Japan's steel exports to the United States rose 13 percent
in April from a year ago, after plunging by 40 percent in March,
Japan's preliminary trade data showed on Monday.
Nippon Steel's U.S. subsidiaries, which have a combined
production capacity of 7.1 million tonnes, are benefiting from
stronger local prices, he added.
"But we are closely watching where the products that were
shut out from the United States are going as they could hurt the
Asian market if they come to this area," he said. About 70
percent of Nippon Steel's exports go to Asia.
The hefty U.S. steel tariffs could make Southeast Asia the
new hunting ground for global exporters seeking buyers, industry
officials and traders say, creating a glut that could depress
prices and prompt some producers to close. urn:newsml:reuters.com:*:nL4N1QK1Z0
For now, Miyamoto is upbeat about Asian steel demand.
"Japan's demand in construction and automobiles is solid. In
China, consumer spending is also strong and there are lots of
infrastructure projects such as subways and apartments near the
stations," he said.
Given a healthy demand outlook and its increased spending to
upgrade ageing facilities, Nippon Steel plans to boost its crude
steel output, on a parent basis, to more than 42.6 million
tonnes in the current year to March 2019, from 40.67 million
tonnes a year ago.
The company also aims to improve margins by hiking product
prices to help absorb rising costs of auxiliary materials such
as manganese and zinc and distribution expenses, Miyamoto said.
The steelmaker did not provide an earnings forecast. A
Thomson Reuters survey of 13 analysts has forecast a mean
recurring profit of 351 billion yen ($3.17 billion) for the
current year, against 297.5 billion yen last year.
Among acquisition plans announced earlier this year by
Nippon Steel, the world's No.4 steelmaker, include Sweden's
Ovako, India's bankrupt Essar Steel and its subsidiaries Nisshin
Steel 5413.T and Sanyo Special Steel 5481.T .
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And Miyamoto said the company is optimistic about winning
the bidding race for Essar as Nippon Steel's teamup with
ArcelorMittal MT.AS could help with a quick restructuring of
the Indian firm, the upgrading of factories and also with giving
financial support.
($1 = 110.8300 yen)
(Reporting by Yuka Obayashi and Ritsuko Shimizu
Editing by Manolo Serapio Jr.)
((Yuka.Obayashi@thomsonreuters.com; +813-6441-1798; Reuters
Messaging: yuka.obayashi.thomsonreuters.com@reuters.net))