Japan Major Steel to Prepare for Higher Raw Materials Cost for 2008

Japanese integrated steel makers try to revise the export contract price in April for long term contracts to reflect major change of raw materials cost. They start the price negotiation in mid-December for long term shipment including January-December and January-June. They will decide the price only for January-March and revise the price for April and after. The steel makers expect the raw materials cost could increase widely for iron ore and coking coal. Nippon Steel already started the notice for the contract users. Japanese steel makers have various contract terms for export shipment and some of them include half year and yearly shipment along with quarterly shipment. Iron and steel making raw materials supply is getting tighter while price increases for subsidiary materials and ocean freight. Many analysts expect steel raw materials cost will increase for 2008. Japanese steel makers try to avoid the risk for higher raw materials cost by fixing the price only through March and revising the price in April.