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Tokyo Steel Manufacturing Co., Ltd. reported an operating loss of 2.31 billion yen for the first quarter of its 2026 fiscal year. This was primarily driven by rising scrap steel prices—exacerbated by geopolitical tensions in the Middle East—which caused costs to climb significantly faster than steel product selling prices, thereby narrowing the metal spread (the price margin between raw materials and finished steel). DX51D+ZA HDG, Despite three rounds of price hikes, profit margins remained compressed. The company has maintained its full-year operating loss forecast at 4 billion yen, while raising its net profit forecast to 1 billion yen. Profitability is expected to improve in the second half of the fiscal year as the effects of price increases take hold and the yield of finished steel products rises.
Tokyo Steel, a Japanese electric-arc furnace (EAF) steelmaker, announced that for the first quarter of the 2026 fiscal year (ending June 30, 2026), it recorded a non-consolidated operating loss of 2.31 billion yen, compared to an operating profit of 4.77 billion yen in the same period of the previous fiscal year.
During the period, the company’s net sales fell by 1.3% year-on-year to 72.93 billion yen, while net profit declined by 49.5% year-on-year to 1.88 billion yen. DX51D+ZA HDG, Tokyo Steel noted that gains from the sale of investment securities and other assets provided some support to its net profit.
The company pointed out that rising tensions in the Middle East have driven a rapid increase in scrap steel prices, significantly squeezing profit margins. Although Tokyo Steel has raised its steel product prices three times since the end of the previous fiscal year, these increases have not yet been fully reflected in actual shipment prices.
In terms of production, Tokyo Steel’s crude steel output for the first quarter stood at 838,000 tonnes, down 1.5% year-on-year, while rolled steel output reached 767,000 tonnes, a decrease of 0.9% year-on-year.
During the same period, the company’s steel shipments totaled 739,000 tonnes, down 0.9% year-on-year. This volume consisted of 629,000 tonnes for the domestic market and 109,000 tonnes for export.
In terms of pricing, Tokyo Steel’s average selling price for steel products rose by 600 yen per tonne year-on-year to 96,800 yen per tonne. In contrast, the company’s average purchase price for steel scrap surged by 11,900 yen per tonne year-on-year, reaching 55,200 yen per tonne.
As a result, the company’s metal spread—the margin between steel product prices and scrap costs—narrowed by 11,300 yen per tonne year-on-year to 41,600 yen per tonne. DX51D+ZA HDG, The sharp rise in steel scrap costs, which significantly outpaced the increase in steel product selling prices, was the primary reason the company swung to an operating loss in the first quarter.
For the full fiscal year ending March 31, 2027 (FY2026), Tokyo Steel has maintained its sales forecast at 315 billion yen—an anticipated year-on-year increase of 17.5%—while also maintaining its full-year operating loss forecast of 4 billion yen.
However, the company has raised its full-year net profit forecast from the previous projection of zero to 1 billion yen. Even so, this figure still represents a 91.3% decline year-on-year.
Tokyo Steel anticipates that its profitability will gradually improve in the second half of the current fiscal year as previous price increases are progressively reflected in actual shipment prices. Meanwhile, the company will focus on enhancing product yield, adjusting production volumes in line with market demand, and expanding sales of low-carbon steel products.
