Steel Material Prices Continue to Rise in 2008

Steel sub material prices including coke and ferroalloy are likely to continue rising in 2008. Chinese coke export price is over US$ 400 per tonne. Manganese ferroalloy price hit the highest price since 2004 and seems to surge more. Cost up of manganese materials may impact steel makers as well as iron ore and coal in fiscal 2008 starting April. Material supply is expanding but Chinese steel demand is increasing at the higher speed. Chinese restrictive measures and tariff hikes on steel material export are also pushing up the prices.Chinese coke exporters currently offer around FOB US$ 450 per tonne, twice from a year earlier, according to Japanese business house. Export license (EL), which is issued by Chinese government, was 14 million tonnes for 2007. However, Chinese coke export amounted to 14.33 million tonnes during January-November 2007, up by 5.5% from the same period of 2006. The premium for additional EL increased to above US$ 60 per tonne.Higher export duty pressed up Chinese coke export price when the government raised the export duty by 10 percentage points to 25% in January 2008. Japanese trading house said Chinese coke export price would not become below US$ 400 per tonne with the increase of Chinese coal price.Manganese ore price is also rising due to the supply tightness. Manganese iron ore shipping price bound for China hit CIF US$ 10 per tonne with 1% manganese for shipment in January-March 2008, while the yearly contract price was set at CIF US$ 2.7 for 2007.Ferroalloy price is increasing, too. Japanese steel industry source said Chinese government raised the export duty for high carbon ferromanganese and silicon-manganese by 10 points to 20% in January 2008. Consequently Chinese export offer price for silicon-manganese hit CIF US$ 1,700-1,800 per tonne.Nickel price almost halved from the peak while chrome price is likely to surge up largely from the present record level. South African suppliers and European stainless steel makers agreed to raise the ferrochrome price by US 21 cents per pound for shipment in January-March. If Japanese stainless steel makers approve the hike at the same degree, Japanese ferrochrome purchasing price would hit CIF US 129 cents per pound.Molybdenum price also stays at the highest level in late 2 years as well as ocean transport costs keep high. It is generally understood that all material prices and freights in Japanese steel industry increases by over 900 billion yen in fiscal 2008 compared with the previous fiscal year.