Japan Major Steel to Start Iron Ore Price Talk

Japanese major steel makers will start iron ore price negotiation in the week with Australian and Brazilian miners for fiscal 2009 starting April. The apparently start the talk by showing each view on the supply and demand toward the price setting. The price is expected to decrease under oversupply when world steel makers reduce the production. The major raw material negotiation, which is one of the key factors for steel price for fiscal 2009, finally starts.

The talk usually starts from pre-talk in around November for price in next year but it was delayed for fiscal 2009 when they are busy to arrange current delivery schedule to meet lower steel production while it is difficult to figure out the ore consumption under decreasing steel demand. While the demand condition is still uncertain, the buyers and suppliers start the talk to set the new price basically before the new fiscal year starting April.

Annual contract price jumped up to double for iron ore and to triple for high grade coking coal for fiscal 2008 from fiscal 2007 under very tight supply condition in the first half of 2008. The balance got oversupply when world steel makers reduce the steel production and iron ore and coal miners decrease the operations.

Steel makers expect major price cut for iron ore and coking coal for fiscal 2009 when steel users urge major price cut. An official of Japanese major steel maker said the raw materials price should decrease less than fiscal 2007 level.