KYOEI STEEL LTD.

Business Details

The segment melts, refines, and rolls steel scrap in electric furnaces to manufacture and sell civil engineering and construction steel products, including Deformed Bars / Screw-Thread Rebar (Tough Neji Bar®), Structural Bars / Sections (Flat Bar, Angle Bar, I-Beam), and Billet (Semi-Finished Product). Operations are conducted through four domestic sites in Hirakata, Kanto, Nagoya, and Yamaguchi, and also include procurement/sales, rebar processing, and transport businesses via consolidated subsidiaries Kyoei Sangyo and Kyoei Kako Hanbai. In FY2026 (ending March 2026), sales of ¥125,527 million accounted for approximately 39.8% of consolidated total.

Recent Overview

Sluggish construction demand combined with a narrower buy-sell spread led to sharp declines in both sales and profit

In FY2026 (ending March 2026), demand for construction steel remained weak due to construction delays and project revisions caused by labor shortages at construction and logistics sites, as well as the impact of soaring materials prices, resulting in product shipment volume of 1.380 million tons, down 71 thousand tons year on year. Raw material (steel scrap) prices fell by ¥3.5 thousand (7.4%) year on year for the full year, but product prices also fell by ¥7.6 thousand (7.4%), narrowing the buy-sell spread by ¥4.0 thousand (7.3%). In the fourth quarter, domestic steel scrap prices surged sharply amid a weaker yen and heightened tensions in the Middle East, but it was difficult to pass this on to product prices given the demand environment. As a result, sales decreased by ¥17,075 million (12.0%) year on year to ¥125,527 million, and operating profit decreased by ¥6,107 million (35.2%) year on year to ¥11,258 million.

Key Products

Growth Drivers

• Improved sales efficiency and enhanced presence in the Kanto region through the four-site domestic operating structure
• Management of the buy-sell spread (the difference between product prices and raw material prices) through efforts to maintain and raise product prices
• Diversification of steel scrap procurement (upstream strategy) and strengthening of value-added products such as processed rebar (downstream strategy)
• Appeal to environmentally conscious customers and differentiation/sales expansion through the Ethical Steel brand
• Improvement of the profit structure through continued cost reduction efforts

Risks

• Continued weak demand for construction steel due to construction delays and prolonged project timelines caused by labor shortages and work-style reforms at construction and logistics sites
• Risk of a narrower buy-sell spread due to an upward trend in steel scrap prices (affected by yen depreciation and Middle East conditions) combined with difficulty passing costs through to product prices
• Cost pressure from rising labor costs and freight rates, and increased fixed cost burden due to lower production volume
• Uncertainty over the outlook for domestic construction investment (economic downturn risk from US trade policy and rising prices)
• Risk of impairment of fixed assets (an impairment loss of ¥190 million was recorded in the Domestic Steel Business in FY2026)
• The company expects the Domestic Steel Business's performance in the next fiscal year (FY2027, ending March 2027) to be even more challenging than in the current fiscal year