Pacific Metals Co., Ltd.

Business Details

The company procures nickel ore from equity-method affiliates located in the Philippines and smelts it into ferronickel products at the manufacturing division of the Hachinohe head office, selling to stainless steel manufacturers both domestically and overseas. Major customers in FY2026 (ending March 2026) were Nippon Steel Corporation (net sales of ¥6,966 million), Japan Steel Works M&E, Inc. (¥1,046 million), and WALSIN LIHWA CORPORATION (¥344 million). This is the core segment accounting for the majority of consolidated net sales and profit/loss.

Recent Overview

Sales volume declined 27%, but reversal of inventory write-downs improved operating loss by ¥2,458 million

Net sales of the Nickel Business in FY2026 (ending March 2026) were ¥8,660 million (down 30.0% year on year). Ferronickel sales volume declined 27.0% year on year to 3,962 tons due to continuation of the strategic policy of restraining volume with an emphasis on profitability. The applicable LME nickel price fell 10.9% year on year to $6.91/lb, and low selling prices continued, partly reflecting reference to nickel pig iron prices. On the other hand, cost of sales decreased due to the reversal of inventory write-downs, and the operating loss narrowed to ¥4,824 million (from ¥7,282 million in the prior period). The major customer changed from Nippon Steel Stainless Steel Corporation to Nippon Steel Corporation (¥6,966 million).

Key Products

Growth Drivers

• Improvement in cost of sales due to reduction/reversal of inventory write-down amounts (operating loss narrowed by ¥2,458 million year on year in FY2026, ending March 2026)
• Increase in equity in earnings of affiliates from equity-method affiliates such as Nickel Asia Corporation (¥7,875 million in FY2026, ending March 2026, up ¥2,462 million year on year)
• Improved operational efficiency through thorough profitability-focused order-taking and pursuit of minimum costs
• Continuation of the policy of maintaining profitability through strategic restraint of ferronickel sales volume
• Expansion of applications toward matte raw materials (ongoing discussions to expand applications from stainless steel raw materials to matte raw material uses)
• Recovery of the applicable LME nickel price expected in the FY2027 (ending March 2027) forecast (forecast of $7.98/lb versus actual $6.91/lb in the prior period)

Risks

• Risk of decline in LME nickel prices (the applicable price for FY2026, ending March 2026, fell 10.9% year on year to $6.91/lb)
• Continuation of a shift in ferronickel demand due to the price advantage of nickel pig iron (an environment in which nickel pig iron prices are partly referenced in setting selling prices continues)
• Rising production costs due to persistently high prices of nickel ore, the main raw material, as well as raw fuel and electricity prices
• Sluggish equipment utilization rates in the stainless steel industry due to stagnation in the Chinese real estate market
• Slowdown in ferronickel demand due to reconsideration of stainless steel scrap blending ratios amid carbon neutrality considerations
• Foreign exchange risk (erosion of sales revenue due to yen appreciation)
• Risk of supply chain disruption due to US tariff measures
• Risk of sales concentration in a specific customer (Nippon Steel Corporation accounted for approximately 80.4% of Nickel Business net sales in FY2026, ending March 2026)
• Risk of market price collapse due to oversupply of Indonesian nickel pig iron