Nippon Steel's profit grows on higher prices

Nippon Steel’s profit grows on higher prices

Nippon Steel recorded strong profit despite unchanged production in the quarter ended December 31, 2005 (3rd Q of FY2005), thanks to strong demand from manufacturing industries such as automobiles, shipbuilding and industrial machinery in Japan. According to the preliminary figures, the company produced 8.34 million tons of crude steel through the quarter, unchanged from a year ago. Meanwhile, its steel product shipments in the quarter came to 7.17 million tons steel, down 3.34 percent year on year with. Exports accounted for 29.1 percent of total shipments, while their ratio was 31.0 last year. However, the average price of the company's steel products in the quarter was Yen 75.600/ton ($646), up 20 percent year on year. Thanks to the increase in the average price (arising due to more sales of higher priced products), Nippon Steel's net profit in the quarter increased 12.6 percent to Yen 74.42 billion ($630.68 million), up from Yen 66.07 billion a year ago. The sales of the company increased 11 percent year on year to Yen 952.70 billion ($8.07 billion). According to the company, the Japanese economy continues to recover thanks to increasing exports, expanding equipment investment by private enterprises and steady growth in personal consumption. Therefore, Japan's manufacturing industries are on the rise, though the decrease in building construction continues. As to the company's exporting markets, supply and demand remain tight for high grade steel products but the markets are loosening for commodity grade steel products due to increased production caused by expanding capacity in China. Therefore, Nippon Steel's priority in 2006 will be maintaining and improving its steel product sales prices.