Japan Major Steels’ Selling Price to Rise for F2007

Averaged steel selling price of Japanese major steel makers including Nippon Steel, JFE Steel, Sumitomo Metal Industries and Kobe Steel will increase by 3,000-6,000 yen to 78,000-106,000 yen per tonne for fiscal 2007 ending March 2008 from fiscal 2006, which represents increases for 5 years in a row. The price is 30,000-40,000 yen higher than recent bottom in fiscal 2002 due to worldwide steel tight supply and higher cost for raw materials and energy. The steel price is likely to keep increasing for fiscal 2008 due to jump of cost. The averaged price of 5 major steels including Nisshin Steel was highest level in fiscal 1981-1982 just after second oil shock. The price was 99,300 yen per tonne for Nippon Steel, 139,200 yen for Sumitomo Metals, 91,000 yen for Kobe Steel and 154,000 yen for Nisshin Steel, which was around 20,000 yen higher than estimated prices for fiscal 2007 though the price bases were different for products mix and export weight. Their bottom price was 49,700 yen per tonne for Nippon Steel, 47,300 yen for combined price of NKK and Kawasaki Steel and 44,100 yen for Kobe Steel in fiscal 2002. The price decreased to less than 50,000 yen for the 3 makers impacting the profit. They tried to improve the profitability to sustainable level by increasing the price level and shifting to higher valued products. With world wide tight supply of raw materials and higher steel demand since fiscal 2003, they passed higher cost price on the selling price. Japanese steel industry estimates the cost increased by total 3.6 trillion yen for raw materials, energy and freight since fiscal 2003. The annual cost up is estimated to be 300 billion yen for fiscal 2003, 700 billion yen for fiscal 2004, 1 trillion yen for fiscal 2005, 600 billion yen for fiscal 2006 and 1 trillion yen for fiscal 2007. Nippon Steel expects the averaged steel selling price increases by 5,000 yen to around 80,000 yen per tonne for fiscal 2007 from fiscal 2006, which represents first 80,000 yen mark since 1992. The averaged price increases by 3,000-10,000 yen for JFE Steel, Sumitomo Metals and Kobe Steel. However, they expect lower recurring profit despite of the higher sales volume and price under higher cost for raw materials and energy. Nippon Steel’s vice president Kiichiro Masuda said cost of raw materials and freight could increase by around 2 trillion yen for Japanese steel industry for fiscal 2008 from fiscal 2007 due to price jump for iron ore and other materials.