S&P Downgrades Nippon Steel

June 22, 2011
Concern over the firm's ability to pass on higher costs of raw materials

Due to concerns over Nippon Steel's profitability in the face of rising commodity prices, Ratings agency Standard & Poor's on June 22 said it had downgraded Japan's biggest steelmaker.

S&P cut Nippon Steel one notch from A- to BBB+, eighth on a scale of 22 with a stable outlook, on concerns over the firm's ability to pass on higher costs of raw materials.

"In fiscal 2010, Nippon Steel had to shoulder a net 200 billion yen (US$2.5 billion) increase in costs for raw materials that it was unable to pass on to customers," S&P said in a statement, noting the firm's operating margins were well below 2007 levels.

Iron ore and coking coal, the two main raw materials for steel production, have seen significant price rises in recent years in a market dominated by the three global mining giants, Anglo-Australian BHP Billiton, Rio Tinto and Brazil's Vale.

Tokyo-headquartered Nippon Steel Corp. produces high-quality steel for use in a variety of sectors globally, with the automotive industry being a key customer.

On June 20 Moody's Japan K.K., the Japanese unit of the U.S. ratings firm, downgraded Nippon Steel by one notch to A2 for the same reasons.

In February Nippon Steel and third-ranked rival Sumitomo Metal Industries said they would work towards a merger that would create the world's second-largest steel firm by 2012.

Copyright Agence France-Presse, 2011

Popular Sponsored Recommendations

Learn How Manufacturers like 3M Cater to Digital Buyers to Increase Sales

Aug. 13, 2023
In this article, you'll learn how manufacturers can balance educating and guiding their buyers through their complex buying process with a digital first approach to product discovery...

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

3 Best Practices to Create a Product-Centric Competitive Advantage with PRO.FILE PLM

Jan. 25, 2024
Gain insight on best practices and strategies you need to accelerate engineering change management and reduce time to market. Register now for your opportunity to accelerate your...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!