Japan Steel Works: can cope with demand
TOKYO, July 26 - Japan Steel Works Ltd said its plans to spend $900 million to boost its production of parts for nuclear power plants will help it meet demand until 2020, avoiding further bottlenecks that have delayed some global nuclear projects.
The company has no plans to further expand reactor-related capacity after 2012, Ikuo Sato, president of Japan Steel Works, told Reuters in an interview on Monday.
The firm, in a bid too meet a long list of orders from nuclear reactor manufacturers, such as Toshiba Corp of Japan and Areva SA of France, has said it is planning to more than double its production capacity by March 2012. The new capacity will allow it to produce 12 reactor pressure vessels a year, up from 5.5 units now.
A serious shortage of forged heavy nuclear reactor parts at the Japanese company encouraged industry rivals such as Britain's Sheffield Forgemasters International Ltd and South Korea's Doosan Heavy Industries and Construction, as well as Chinese and Indian firms, to aim to move into the sector to capitalise on the deficit.
But Japan Steel Works is still the only company in the world capable of manufacturing ultra-large forgings for nuclear power plants to Western standards.
It has an 80 percent share of the global market in specialised nuclear components critical to nuclear reactors, such as pressure vessels, pressurisers and steam generators.
Sato said he expects about 120 nuclear reactors to be built around the world in the next ten years.
"We expect our latest capacity expansion will be more than sufficient to cope with demand and that production bottlenecks in ultra-large forgings will be erased when our investment is completed by March 2012," Sato said.
He continued that orders for reactor vessels from U.S. utilities have been delayed due to funding problems and that he is closely watching whether China would go ahead with its plans to build an estimated 50 reactors by 2020.
Sheffield Forgemasters said in March it expects to start producing the ultra-large forgings needed for new reactors within three years and that it had secured the necessary financing.
South Korea's Doosan is also building a large press to add to existing capacity.
"Rising capacity may increase competition, but we expect to maintain our market share in top-end products," said Sato.
Japan Steel Works, which also produces steel pipes and injection moulding machines, expects a 20 percent fall in net profit to 14 billion yen for the year to March 2011, hit by high depreciation costs stemming from its large investment in capacity.