Tokyo Steel stops exports due to rising scrap prices

TOKYO: Tokyo Steel Manufacturing Co has stopped all exports because soaring steel scrap prices and the strong yen are making such contracts unprofitable, a company spokesman said on Friday.

Japan's top maker of steel girders has ceased signing any new contracts from February, said Nobuaki Nara, the spokesman.

The dollar dropped below 100 Japanese yen in March for the first time since 1995. Although it has recovered and was trading above 102 yen Friday, that is well below levels of around 120 yen at the start of 2007. Such a strong yen hurts Japanese companies by eroding the value of any overseas earnings when repatriated and converted into the domestic currency.

In addition, prices of raw materials, including steel scrap, have surged in recent months.

Exports, mostly to South Korea and Southeast Asia, made up about 20 percent of the Tokyo-based manufacturer's sales, Nara said. He said exports may be resumed if they start to produce a profit.

After several years of moderate growth, Japan's economy is at risk of falling into recession amid the global credit crisis, soaring commodity prices and a rising yen.

Tokyo Steel stock dropped 2.7 percent to 1,417 yen (US$13.8; euro8.9) in Tokyo.

Shares in other steelmakers also fell, with Nippon Steel dropping 2.4 percent to 530 yen (US$5.17; euro3.33) and JFE Holdings dropping 3.1 percent to 4,620 yen (US$45.07; euro29.03).