Metallurgists of Japan raised their profit forecasts

Japan, the second largest steelmaking country, is raising its profit forecast for fiscal 2014, which ends at the end of March. A weaker yen and stronger local demand are helping, but the slump in oil prices is expected to reduce pipe orders in 2015, which could reduce metallurgical revenues. ($ 1 = 117.3300 yen)

Nippon Steel & Sumitomo, Japan's largest steelmaker, raised its forecasts for the current fiscal year by 3 percent to 410 billion yen ($ 3.49 billion), citing higher margins in its business. JFE Holdings, the second steel company in the country, revised its annual profit estimate by 10 percent, while Kobe Steel increased it by 6 percent.

The healthy earnings are on track despite a weakening steel market in the rest of Asia, where massive exports from China are under pressure. In Japan, the decline in the yen and good consumption demand for infrastructure construction projects and shipbuilding provided support. But that trend could change in the next fiscal year, especially for Nippon Steel, whose seamless pipes used for oil rigs and trunk pipelines have generated 20 percent of profits this year. In the next fiscal year, the company could cut its profits by 20-30 billion yen.

Global oil prices have dropped more than 50 percent since June, forcing a number of oil and gas companies to cut capital spending plans for 2015, but they will resume once prices recover to $ 55-65.

The JFE said the sharp drop in oil pipe orders would have a limited impact on the company's earnings, amounting to only 4 percent of its steel sales. Kobe Steel, meanwhile, is hoping for an indirect impact as it supplies steel plates to pipeline manufacturers. Managing Director Naoto Umehara said: "We expect to benefit from the rise in the economies of countries consuming cheaper oil."