April 25, 2014 / 7:26 AM / 3 years ago

UPDATE 1-Kobe Steel crude steel output hits 6-yr high

3 Min Read

* Crude steel output increases 8.6 pct in 2013/14

* Aims for 7.65 mln T crude steel output in 2014/15

* Returns to black in 13/14, but sees lower profit in 14/15 (Adds comment, detail)

TOKYO, April 25 (Reuters) - Kobe Steel Ltd, Japan's No.3 steelmaker, said its crude steel output hit a 6-year peak in the business year just ended and that production this year would be similar due to robust domestic demand.

The rise is in line with overall Japanese crude steel output, which marked its highest level in six years in the 2013/14 year that ended March 31. It was boosted by strong construction and automobile demand as Prime Minister Shinzo Abe pushed to revitalise the nation's economy with infrastructure investments and monetary easing.

Kobe Steel's crude steel output rose 8.6 percent year-on-year in 2013/14 to 7.62 million tonnes - the highest since 2007/08.

It plans to produce 7.65 million tonnes this year, the company's executive officer Naoto Umehara told a news conference on Friday.

"Demand for automobile steel is expected to remain as sound as last business year and demand from ship builders will likely pick up," Umehara said.

"Construction demand will also stay strong thanks to government stimulus and rebuilding work in the northeast region (hit by the earthquake and tsunami in 2011)."

Rival JFE Holdings Inc said on Thursday it aimed to increase its crude steel output by about 5 percent in 2014/15.

A cooling of China's economy and an oversupply of steel in Asia has hit many of the region's steelmakers, but Japanese producers are being supported by the "Abenomics" economic stimulus.

Kobe Steel returned to the black in the year just ended, with 85.04 billion yen ($832 million) in group recurring profit, which is pretax and before one-off items, against a recurring loss of 18.15 billion yen a year earlier.

Increased steel output, improved steel prices and large appraisal profits on raw material inventories were behind the turnaround, Umehara said.

The company forecast a 5.9 percent drop in its recurring profit in 2014/15 to 80 billion yen, due mainly to a lack of the big appraisal gains it had a year earlier.

"If we exclude the appraisal gains factor, our earnings would see an increase this year," said Akihiro Yamamoto, Kobe Steel's general manager.

The firm's forecast is in line with the average estimate by 13 analysts surveyed by Thomson Reuters I/B/E/S at 81.23 billion yen.

JFE on Thursday said its recurring profit grew 3.3-fold to 173.68 billion yen in the 13/14 from a year earlier. It did not provide its forecast for this year.

In contrast, South Korean steelmaker POSCO on Thursday cut forecast for sales and investment for this year after its first quarter operating profit fell 11 percent to 518 billion Korean won ($498.5 million) in the January to March quarter as China's slowing economy curbed demand for steel.

$1 = 102.2350 Japanese Yen $1 = 1039.2000 Korean Won Reporting by Yuka Obayashi; Editing by Dominic Lau and Joseph Radford

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