Kobelco bets on high demand for aluminum sheet from Japanese automakers

Kobe, also known as Kobelco, is a leading supplier of aluminum and steel sheet to Japanese car and auto parts manufacturers. The third largest steelmaker in Japan, Kobe, operates in nine segments and steel will only contribute about 20 percent of this year's profit.

Kobelco expects higher demand for its aluminum sheet in the automotive industry. In fiscal 2015, sales are forecasting 12 percent growth and sheet shipments to major Japanese auto manufacturers 14 percent, improving the company's overall profit margin. In April, management recorded the highest sales for the division in the current fiscal year.

The company believes that the aluminum business should provide increased profits over the next few years as automakers use more aluminum in their car designs. Toyota, which is one of the largest customers for Kobelco, has added aluminum to its entire line-up and has also received speculation for an aluminum bonnet for the America's best-selling Camry. Therefore, Kobelco is also considering building an aluminum sheet plant in the US in 2018, which is likely to meet the growing demand from Japanese automakers in North America, including Toyota.

Kobelco plans to expand its power generation business, which also looks promising. The construction of a new thermal power plant is currently at the planning stage. Kobelco is restructuring its steel operations, keeping several blast furnaces idling to further boost profits. The global steel market continues to struggle with oversupply, and in Japan at least there are signs that the market is becoming more balanced. If this trend continues, then Japanese steelmakers, including Kobelco, will benefit.