Strong global demand offset rising materials prices in fiscal 2004, allowing Japan's major steelmakers to log record earnings, according to earnings reports released through Thursday.
The firms in question expect another record year in fiscal 2005, despite prospects of continued steep increases in iron ore and coal prices as steelmakers worldwide scramble to obtain raw materials to meet rising demand in countries such as China.
JFE Holdings Inc., the nation's second-largest steel manufacturer, said Thursday that its group operating profit soared 84 percent to a record 467.24 billion yen, on revenue of 2.8 trillion yen, up 13 percent from a year earlier.
"On the domestic front, there was strong demand from manufacturers such as automakers and shipbuilders," Toshikuni Yamazaki, JFE's executive vice president, told a news conference Thursday. "Exports were also solid, spearheaded by those to Asian countries."
On the back of this strong demand, the company was able to hike prices of its steel products, raising the average price per ton to 61,700 yen in fiscal 2004 from 50,500 yen a year earlier.
Similarly, industry leader Nippon Steel Corp. has reported that its consolidated operating profit for fiscal 2004 jumped 92 percent to a record 429.95 billion yen, on revenue of 3.39 trillion yen, up 16 percent.
Sumitomo Metal Industries Ltd. and Kobe Steel Ltd., the nation's third- and fourth-largest steelmakers, respectively, also reported record earnings, notwithstanding the sharp increase in raw materials prices.
In total, the steep rise in iron ore and coal prices, as well as increased freight costs, slashed a total 435 billion yen from the four steelmakers' profits for the year.
When asked about the sky-high prices of the materials needed to produce steel, JFE's Yamazaki remarked: "It is unprecedented. We have been watching the situation with great surprise."