ENVALITH
共英製鋼株式会社 logo

KYOEI STEEL LTD.

5440・Prime Market・Iron & Steel

Official website
共英製鋼株式会社 logo
KYOEI STEEL LTD.5440

Business

Kyoei Steel, founded in 1947, is an electric-arc-furnace (EAF)-specialized steel manufacturer that melts, refines, and rolls steel scrap to produce and sell steel products for civil engineering and construction, such as Deformed Bars / Screw-Thread Rebar. Domestically, the company operates a four-site structure in Hirakata, Yamaguchi, Nagoya, and Kanto, boasting the top domestic share in rebar, while overseas it operates under a "global three-pole structure" spanning Vietnam (multiple sites in the north and south), Texas in the U.S., and Alberta in Canada. The company also handles medical and industrial waste melting treatment (Environmental Recycling Business) utilizing the high heat of electric furnaces, building a resource-recycling business model that integrates steelmaking with waste treatment. Of the consolidated net sales of ¥315,106 million, the Overseas Steel Business accounts for the majority at ¥178,988 million, with the growth axis shifting overseas.

Business Model

The company's main revenue source is the manufacture and sale of rebar products through electric-arc-furnace steelmaking and rolling using steel scrap as raw material, with the spread between product prices and raw material prices (the buy-sell price spread) serving as the primary profit driver. Domestically, four business sites supply their respective demand areas under a local-production-for-local-consumption model, while overseas operations roll either locally produced or purchased billet to meet local construction demand. Waste melting treatment utilizing the high heat of the electric arc furnace serves as a secondary revenue stream generating treatment fee income, and byproducts such as slag are also sold as recycled crushed stone. The company is also promoting the enhancement of non-price competitiveness through value-added products (Deformed Bars / Screw-Thread Rebar and Processed Rebar Products) and the "Ethical Steel" brand as a pillar of its revenue structure transformation.

Company Strengths

The company covers major demand areas through a four-site structure comprising Hirakata, Yamaguchi, Nagoya, and Kanto, maintaining the top share in the domestic rebar market. In March 2024, it absorbed and merged with Kanto Steel to form the Kanto Business Site, strengthening its supply base in the greater Tokyo area. Domestic shipment volume reached 1.38 million tons in FY2026 (ending March 2026), establishing a stable, locally-produced-and-consumed supply system.

In Vietnam, the company operates multiple sites in the north and south, and in June 2025, a new rolling line at the Hai Phong plant of Vietnam Italy Steel Co. came online, establishing an integrated steelmaking-rolling system. Alta Steel Inc. in Canada maintains high profitability in fine rebar, while Bayou Steel (Vinton Steel) in the U.S. is undergoing a large-scale renewal project worth $327 million. Overseas sales of ¥178,988 million account for 56.8% of the group's total sales.

Since 1989, the company has operated a melting treatment business for medical and industrial waste utilizing the high heat of electric furnaces, accumulating over 35 years of treatment track record and licenses. The detoxification treatment of medical waste using the "Mesqued System" is established as a proprietary brand, and its capability to handle difficult-to-treat waste such as asbestos forms an entry barrier that competitors find difficult to replicate in a short period.

ENVALITH's Perspective

In FY2026 (ending March 2026), the Overseas Steel Business posted net sales of ¥178,988 million and operating income of ¥6,143 million, a significant improvement from an operating loss of ¥1,713 million in the prior period, driving the group's overall operating income growth (up ¥1,634 million year on year). Meanwhile, as a subsequent event, an additional 100 million US dollar investment in Kyoei Steel USA was completed in April 2026, and close attention will be needed regarding the funding burden and completion timing (targeted for early 2027) of Binton Steel's large-scale capital investment (construction of a new steelmaking plant and renewal of the rolling line), and their impact on results and finances from the next period onward.

In FY2026 (ending March 2026), the Domestic Steel Business saw shipment volume decrease by 71 thousand tons year on year to 1,380 thousand tons, and the sales-purchase price spread also narrowed by ¥4.0 thousand year on year, resulting in operating income of only ¥11,258 million, down ¥6,107 million (35.2%) year on year. For the next period (FY2027, ending March 2027), the company has explicitly stated that it expects "an even more challenging environment than the current period," citing construction capacity constraints due to labor shortages, a rising trend in steel scrap prices, and increased energy and logistics costs against the backdrop of Middle East tensions, indicating that a recovery in profitability of the domestic business is expected to take time.

The company's forecast for FY2027 (ending March 2027) calls for net sales of ¥360,000 million (up 14.2% year on year), operating income of ¥16,000 million (down 5.7%), ordinary income of ¥14,000 million (down 13.6%), and profit attributable to owners of parent of ¥9,000 million (down 8.8%), indicating a decline in profits. The dividend is also planned to be reduced from ¥90 per year to ¥70 (dividend payout ratio of 33.8%). Return on equity declined to 4.8% in FY2026 (ending March 2026) from 5.4% in the prior period, and there is a possibility that ROE will remain sluggish until the effects of the large-scale North American investment become apparent. It should also be noted that equity in earnings of affiliates accounted for using the equity method shrank significantly, from ¥1,204 million in the prior period to ¥263 million.

Growth Strategy

Establishing a three-region global structure through large-scale capital investment in North America, sales expansion in Vietnam, and Ethical Steel initiatives

Advancing a fundamental renewal of the aging U.S. site through construction of a new steelmaking plant and large-scale renewal of the rolling line. Aims to strengthen the earnings base of the North American business by reducing manufacturing costs and enhancing production capacity. Completed an additional 100 million USD investment in Kyoei Steel USA in April 2026 to secure financing.

Against a backdrop of infrastructure investment driven by the Vietnamese government's growth-focused economic policy, all sites in both the north and south achieved operating profitability. The new Hai Phong rolling plant in the north, which began operations in June 2025, has recorded production and sales roughly in line with plan, establishing an integrated steelmaking-to-rolling structure. Both the northern and southern areas are expected to see increased sales volume and higher revenue and profit next period as well.

Promoting the environmental advantage of low-CO2 electric-arc-furnace steel under the "Ethical Steel" brand to differentiate sales to environmentally conscious customers. Aims to maintain pricing discipline and enhance added value amid weak domestic demand. Has stated a policy of continuing to expand sales next period to increase profitability.

Amid headwinds from rising steel scrap prices and increasing energy costs, continuing further cost reductions and product price increases. Working to improve the profit structure both upstream (diversifying scrap procurement) and downstream (strengthening value-added products such as processed rebar products). Plans to continue countermeasures next period while anticipating further deterioration in the domestic business.

Last updated: July 19, 2026