Japan's top steelmaker Nippon Steel Corp yesterday forecast a fourth straight year of record profits, with demand expected to remain robust despite recent financial market turmoil.
Nippon Steel said it anticipates a 4 percent rise in net profit to ?365 billion (US$3.2 billion) for the fiscal year to next March. Previously it had predicted a slight fall to ?350 billion.
"Demand for steel products is now expanding rapidly, led by emerging markets such as China, India, Russia, and the expansion is likely to continue," Nippon Steel executive vice president Kiichiro Masuda told reporters.
Fears of a credit crunch because of rising defaults in US subprime mortgages to risky borrowers roiled world markets last month, triggering concerns that slowing global economic growth could hit demand for steel and other metals.
But global demand is absorbing further production increases in China while demand from Japanese auto, ship and machinery manufacturers remains strong, the company said.
"The subprime loan problem in the US has not affected steel demand so far, and we believe that any effect on the US economy from this problem will have negligible impact on steel demand," Masuda said.
Nippon Steel, which became the world's second largest steelmaker after last year's creation of the Arcelor-Mittal behemoth, sees revenue jumping 11.6 percent to 4.8 trillion yen in the year to next March.
Operating profit is expected to hold steady at ?580 billion.
Separately, Shanghai Baosteel (上海寶鋼), China's largest producer, said yesterday it will build a 19.4 billion yuan (US$2.5 billion) mill with Handan Iron and Steel Group.
The plant in Hebei Province will have an annual capacity of 460 tonnes and will be completed by 2010, Baosteel said in a statement to the Shanghai stock exchange.
Baosteel and Handan Iron and Steel signed a letter of intent IN May that underlined terms in the 50-50 stake venture, the statement said.
China has been encouraging consolidation and cooperation among major state steel companies amid concerns of overcapacity and to create companies able to compete with global steel makers.
The announcement followed a state press report on Wednesday that Baosteel will nearly quadruple capacity to 80 million tonnes by 2012.
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