Japan-based Nippon Steel Corporation may beat its profit forecast for the financial year 2021-22 ending March 31, amid higher demand and strong steel prices, according to Reuters. Nippon Steel has stated that it expects its business profit to increase to JPY 450 billion ($4.1 billion) for the financial year 2021-22, up from JPY 110 billion a year earlier and the highest since 2014.
As China intends to cut its steel production capacity by 236 million mt from 2021 to 2025, “the steel market will become even tighter, while iron ore prices will likely fall,” Takahiro Mori, Nippon Steel executive vice president, told Reuters. Global steel demand is expected to increase by 5.8 percent this year and, as a result, steel prices will stop falling at the current levels.
Nippon Steel aims to cut carbon emissions by 30 percent by 2030 from 2013 levels and to become carbon neutral by 2050. According to Takahiro Mori, the company plans to take advantage of its profit recovery to accelerate research and development for decarbonization. The company aims to invest in developing three technologies, including mass production of high-grade steel, cutting carbon emissions in steelmaking processes by using hydrogen to partially replace coal to reduce iron ore, and use of 100 percent hydrogen in direct reduction processes. The company expects JPY 500 billion in R&D and JPY 4-5 trillion in capital expenditure will be required to achieve zero-carbon steel production, as SteelOrbis understands. As companies especially in Europe are accelerating development of low-carbon steel, the Nippon Steel official called on the Japanese government to promote technological innovation and support the creation of a hydrogen supply chain.
The Nippon Steel executive vice president also talked to Bloomberg regarding the widened gap between international steel prices and local steel prices in Japan, urging local buyers to accept steel price increases to ensure stable supply, while he called for urgent price hikes in order to be able to compete with major foreign rivals equally. “Particularly, we’ll need to urgently correct the contract prices that are settled through discussion with big users. Major overseas mills are benefiting from high steel prices in their home markets, but we don’t have that. In the second half of the last year, we desperately cut costs and worked hard to lower breakeven points, so I don’t think the company’s costs are higher than those of major overseas players,” he told Bloomberg.