The credit quality of Japanese steelmakers will remain pressured by poor business conditions in the industry, with few prospects for sustained improvement in domestic demand, Standard & Poor's Corp. said Monday.
The steel industry has been hit by overcapacity, declining prices, increasing refinancing requirements, intensifying competition both at home and abroad, and the weak overall economic situation, the U.S. credit-rating agency said.
"To date, steel companies have been reluctant to take aggressive restructuring measures, including the burden of excess capacity," the agency said.
NKK Corp., on the other hand, is expected to benefit from the completion of its merger with Kawasaki Steel Corp.
With the exception of NKK Corp., which will benefit from the completion of its merger with Kawasaki Steel Corp., the credit quality of major steelmakers is expected to remain under pressure, it said.
Nippon Steel Corp. is less vulnerable to pressures in the industry, given its relatively stronger market position and financial profile, it said.
Sumitomo Metal Industries Ltd. and Kobe Steel Ltd., facing debt-refinancing challenges and a lack of debt-protection measures, are more susceptible to such pressures, the rating agency said.
Steel output up 1.4%
Japan's crude steel output was 8.77 million tons in April, up 1.4 percent from a year earlier and marking the first year-on-year rebound in 13 months, the Japan Iron and Steel Federation said Monday.
The figure was up 0.7 percent from the preceding month, the federation said.
The nation's steel production suffered a 4.5 percent decline in 2001 to 102.07 million tons.