JFE Steel has lowered its crude steel production forecast for the full fiscal year 2024-25 to 22.4 million tons, down from the 23 million tons forecast announced in August. It also lowered its annual net profit forecast by 37% to USD 844 million. The company said the main reason for the revision was weaker-than-expected demand in Japan’s construction sector. Rising material costs and labor shortages have led to delays in major construction projects, further depressing steel demand. JFE noted that the slowdown in the construction sector is becoming increasingly evident.
The overseas market has also faced headwinds, particularly in Southeast Asia, where lower automobile sales have negatively impacted steel consumption. Higher borrowing costs and stricter loan policies for automobile purchases have dampened demand. Additionally, an oversupply of steel products from Chinese firms has created ample supply in the global market, further suppressing prices and demand.
JFE’s production and financial results for the first half of fiscal 2024 (April-September 2024) reflect challenging market conditions. The company’s standalone crude steel production decreased by 9.29% y-o-y from 12.16 million tons to 11.03 million tons. On a quarterly basis, production decreased by 9.3% to 5.55 million tons in the second quarter.
Consolidated steel production also decreased by 9.03% y-o-y to 11.69 million tons. However, it increased slightly by 1.5% q-o-q to 5.89 million tons in the second quarter.
Regarding financial results, JFE achieved a net profit of 42.5 billion yen (276 million USD) in the first half, a 61% decrease compared to the same period in the previous year.
JFE remains cautious about the steel market's outlook, anticipating continued subdued demand and persistent oversupply challenges in the overseas market. With domestic construction delays and international market pressures, the company faces a challenging path ahead for the remainder of the fiscal year.
Comments
No comment yet.