Nippon Steel Estimates 600 billion yen Raw Materials Cost Up

Nippon Steel’s vice president Kiichiro Masuda said at press briefing on Thursday Japanese steel industry’s cost up would be around 2 trillion yen for raw materials, energy and freight for fiscal 2008 staring April from fiscal 2007. The firm’s cost up would be 600 billion yen. The cost will increase by around 500 billion yen only for iron ore in the year from previous year while coal price is expected to jump after ongoing negotiation. Nippon Steel tries to secure coal at extremely high price through spot purchase from USA after supply trouble from Australia due to heavy rain. Mr. Masuda said the raw material supply could be severe at least through September 2008. He said the firm tries to secure captive raw materials sources including J Mendes iron ore mine, which USIMINAS acquired. J Mendes supplies annual 6 million tonnes of iron ore and could be expanded to 29 million tonnes. Mr. Masuda said the firm tries to minimize the cost up impact by cost cutting effort but has to increase the steel selling price to cover the extremely higher cost.