Sail: The euro zone debt crisis and tight credit conditions in China, the world's biggest steel consumer and producer, cut steel demand and squeezed margins despite falls in raw material costs, prompting South Korea's POSCO, Asia's most profitable steelmaker, to describe the quarter as the "most difficult" earnings period.
Earnings at Japanese mills, led by Nippon Steel and JFE, are seen plunging to their worst levels since early 2009 after the Lehman crisis, while profit at POSCO, the world's third-biggest steelmaker, is seen cut in half. (See quarterly results forecast table at bottom)
In China, which produces around half of the world's steel, the sector tumbled into a loss of about 1 billion yuan in the first quarter from a profit of 25.8 billion yuan a year ago, an official with the China Iron & Steel Association said on Wednesday.
Price improvements in China have been small in March and April, when prices normally pick up as construction recovers from the winter lull, analysts say.
"China's demand continues to slow and we haven't seen a robust improvement as we usually see at this time of the year," said Jeremie Capron, a Singapore-based analyst at brokerage CLSA.
"The worst was probably January-March, but I don't think we see a significant improvement in the current quarter."
Chinese steelmakers are boosting production, with the country's crude steel output hitting a record 61.58 million tonnes in March, as mills aggressively responded to small price rises, while the economy grew at its slowest pace in nearly three years in the first three months of 2012.
JFE Holdings Inc, the parent of the world's No.5 steelmaker JFE Steel, and POSCO report earnings on Friday, among the first Asian producers to do so.
YEN IMPACT ON JFE, NIPPON
The lacklustre steel market in Asia bodes ill for Nippon Steel, the world's No. 4 steelmaker, and JFE, which are seen selling more than half of their volume outside Japan.
Still, the yen's easing to 80 against the U.S. dollar from a record high of 75.7 in October and a recovery of domestic auto output after the massive earthquake in 2011 would mean a small improvement in their results compared to their own forecasts.
A stock market recovery led Nippon Steel to review its equity write-off of 89 billion yen, raising its bottom line.
Earnings at Japanese mills, led by Nippon Steel and JFE, are seen plunging to their worst levels since early 2009 after the Lehman crisis, while profit at POSCO, the world's third-biggest steelmaker, is seen cut in half. (See quarterly results forecast table at bottom)
In China, which produces around half of the world's steel, the sector tumbled into a loss of about 1 billion yuan in the first quarter from a profit of 25.8 billion yuan a year ago, an official with the China Iron & Steel Association said on Wednesday.
Price improvements in China have been small in March and April, when prices normally pick up as construction recovers from the winter lull, analysts say.
"China's demand continues to slow and we haven't seen a robust improvement as we usually see at this time of the year," said Jeremie Capron, a Singapore-based analyst at brokerage CLSA.
"The worst was probably January-March, but I don't think we see a significant improvement in the current quarter."
Chinese steelmakers are boosting production, with the country's crude steel output hitting a record 61.58 million tonnes in March, as mills aggressively responded to small price rises, while the economy grew at its slowest pace in nearly three years in the first three months of 2012.
JFE Holdings Inc, the parent of the world's No.5 steelmaker JFE Steel, and POSCO report earnings on Friday, among the first Asian producers to do so.
YEN IMPACT ON JFE, NIPPON
The lacklustre steel market in Asia bodes ill for Nippon Steel, the world's No. 4 steelmaker, and JFE, which are seen selling more than half of their volume outside Japan.
Still, the yen's easing to 80 against the U.S. dollar from a record high of 75.7 in October and a recovery of domestic auto output after the massive earthquake in 2011 would mean a small improvement in their results compared to their own forecasts.
A stock market recovery led Nippon Steel to review its equity write-off of 89 billion yen, raising its bottom line.
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