Why Japan’s EF contingent is in no rush to consolidate

Apr 20, 2009 | 11:53 AM |

The announcement that Kyoei Steel Ltd. and Tokyo Tekko Co. Ltd. are set to merge in October may not herald the long-awaited consolidation of Japan's electric-arc furnace (EF) sector despite its pressing need to do so, analysts and market players warn.

Under the deal, the two companies will both de-list and replace their shares with a new holding company on Oct. 1.

Kyoei Steel is 25.8-percent owned by Sumitomo Metal Industries Ltd. With annual sales of 149 billion yen ($1.52 billion) last year and an annual production capacity of over 2.5 million tonnes, Kyoei ranks as Japan's second-largest EF operator, after Tokyo Steel Manufacturing Co Ltd., and the country's leading rebar producer. With a production capacity of around 700,000 tonnes, Tokyo Tekko is Japan's largest producer of steel screws and rivets, last year posting sales of 61 billion yen ($623.2 million).

Japan's electric furnace sector mainly produces commodity-grade steel, principally for the nation's $12-billion construction steel industry, and is rife with overcrowding.

While the United States has three major mini-mill operators and South Korea has about six following a bout of mergers and acquisitions in the late 1990s, Japan counts 30 of them. ....

Latest Pricing Trends


Are you stocking more inventory today than 18 months ago?


View previous results