Japan Processors Seek Hike for Cold Finish Steel Bar and Wire

Japanese makers of cold finishing bar and special steel wire increase the pressure for the price hike after the news last week that Toyota Motor agreed with Nippon Steel to increase the purchase price of special steel bar and wire by 10,000 yen per tonne. The processors of cold finishing bar and special steel wire apparently try to increase the selling price by more than 13,000 yen including 10,000 yen of wire rod hike by rod makers and higher subsidiary materials and pending higher cost for raw materials. The processors started the negotiation with contract users and distributors. Toyota’s price hike acceptance encouraged the processors to believe the buyers of automotive parts makers will also accept the price hike. The price hike for major users of automakers and auto-parts makers pressures on distributors. Integrated steel makers and special steel makers failed to increase the contract price for automakers in fiscal 2006 ended March 2007 despite of the year long negotiation to cover higher raw materials cost. However, the steels’ profitability gets worse due to higher cost for raw materials. The rod makers increased the selling price by around 10,000 yen per tonne for processors in fiscal 2007 to keep stable supply. The automakers also apparently accepted the hike when they cannot purchase the high quality special steel bar and wire from offshore makers. Automotive application is estimated to represent around 70% of domestic demand for cold finishing bar. The material is also used for parts of construction and industrial machinery. Automotive application also represents 60% of domestic special steel wire demand including bolt, nut and spring. The materials are critical for automotive safety parts.