Nippon Steel & Sumitomo Metal Corp. is considering boosting production capacity of high-end sheet metal in China to meet growing demand there, Executive Vice President Katsuhiko Ota said.
The company is considering raising the capacity at a joint venture with Chinese partner Baosteel Group Corp., Ota said recently.
“We need to beef up the capacity if we want to satisfy customers and secure market share,” Ota said.
But when and how the capacity will be raised remains to be decided, he said.
Some estimates show that annual automobile production in China will rise to 30 million units by 2020 from 20 million at present, Ota noted.
The company estimates its group pretax profit will jump 3.9-fold to ¥300 billion in the year ending next March from the previous year due to solid demand for steel used in construction projects and stable prices for raw materials.
In Japan, demand from the construction sector is expected to remain robust on the back of post-disaster reconstruction projects and increased public works spending, according to Ota.
Also behind the rosy forecast is expected growth in demand for housing and automobiles amid the yen’s fall and ahead of the planned consumption tax hike next April, Ota pointed out.
“The business environment is healthy enough to forecast (pretax) profit of ¥150 billion for the first half and even more in the second,” he said.
“I think the company has got off to a good start despite the tough business environment it had to go through,” Ota said, referring to how the business has fared since it was formed through a merger of two steel producers last October.
“One of the achievements is that we made decisions on the streamlining of facilities swiftly,” he said.
But Ota said the company still needs to deliver “something extra.”
He cited challenges including the creation and manufacture of new steel products.