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preview-japan steel makers downbeat in 2008, china to recover
Japanese Steel, JFE is expected to double
Tokyo, April 21, Baoshan\'s net profit of 2008 may rise by 37%Reuters)-
Japan\'s two largest steel producers, the Japanese steel company (5401. T)
And JFE Holdings (5411. T)
It is likely to predict twice
Due to soaring costs, the annual profit percentage of the business started this month fell.
But China’s No.
1 steelmaking plant of Baosteel Co. , Ltd (600019. SS)(Baosteel)
Spurred by last year\'s slump in stainless steel sales, the calendar\'s 37% profit could grow by 2008, thanks to the stable price of nickel, the key ingredient of stainless steel.
Soaring raw material and freight costs have put pressure on the revenues of many global steelmakers, which are expected to remain high this year due to strong demand from emerging economies.
Coking coal, one of the main raw materials for steel, will cost three times as much as last year, while Brazilian iron ore will cost 65% more than in April.
The cost of the entire Japanese steel industry is likely to rise by 3 trillion yen ($29 billion)
Earlier this month, a spokesman for the Japanese steel company said.
Despite progress in price negotiations with automakers and other customers, Japanese steelmakers may raise their forecasts this year, many analysts said, they may not raise prices at a fast enough pace to cope with this cost increase.
Takashi Aoki, senior fund manager at Mizuho Asset Management, said: \"The increase in costs makes it take them two years to fully pass on costs to end users . \".
\"We expect profits to start rising again in the next business year, when costs will fall and prices will remain strong.
\"On the other hand, the high price of raw materials will also increase the value of steel manufacturers\' inventory and increase their income by 2008/09.
Pre-tax profits for Japanese steel are expected to reach 546 as of next March. 63 billion yen ($5. 4 billion)
According to a Reuters survey of 10 analysts, it fell by 2% from the previous year.
JFE\'s profit fell 2% to 492.
According to a survey of 12 analysts, 33 billion yen.
South Korea\'s POSCO (005490. KS)
This month raised sales target of 2008 by 17% to reflect a record first
Sales and steel prices rose in the quarter, but the operating profit target remained unchanged at 4. 8 trillion won ($4. 84 billion).
The improvement of stainless steel business and the rise of product prices will help Baoshan post in the 70% quarteron-
Quarterly earnings for net profit in January-March, to 3.
68 billion yuan ($527 million)
According to an average estimate of five analysts at the brokerage and fund management companies surveyed by Reuters.
The result is flat compared to a year ago.
Zhao Zhicheng, an analyst at Essence Securities, said: \"Baosteel\'s stainless steel business will no longer damage its overall profit performance this year because the nickel price is stable . \".
Stainless steel is the main revenue driver in Baoshan.
However, some analysts are cautious about Baoshan\'s overall development.
As there are still some uncertain factors in the second half of the year, the outlook for 2008.
\"China\'s economic trend in the second half of the year is still unclear. we are paying close attention to the possible slowdown in domestic consumption growth and the possible decline in overseas demand, partly due to the global credit crisis, analysts at an asset management company said.
According to Reuters Estimates, a survey of 18 analysts showed a consensus that net profit was 17.
47 billion yuan ($2. 5 billion)
2008, an increase of 37% over the previous year.
Analysts expect 5405 of Japan\'s smaller peers, Sumitomo Metal Industry Co. , Ltd.
Kobe Steel Co Ltd5406. T)
Profits increased slightly by the end of March 2009.
Report on changes in pre-tax profits of the company ($bil)(%)
New Day iron 5. 36 -
JFE Holdings 4 on April 2. 83 -
Sumitomo Metal No. 24, April 2.
April 2 28 Kobe Steel 1.
56 Baoshan, 25, April 6 2.
50*37, April 29 (
Baoshan is expected to net profit of 2008 calendar)(
Additional report by Alfred Cang.
Edited by Chris Gallagher and Hugh Lawson)