Japan Industry Watches China Steel Export after Tax Return Cut

Chairman Hajime Bada of Japan Iron and Steel Federation said on Monday at monthly press conference he watches Chinese steel export after April after Chinese government terminated and reduced tax return for steel export on April 10. The president of JFE Steel said Chinese steel export was record level due to last minutes shipping before the lower tax return but the key is the export in April and May. He emphasized the export in April and May could indicate the export activity in the year.Japanese raw steel output hit second high of 117.75 million tonnes for fiscal 2006 ended March 2007 and some industry players expect higher output for fiscal 2007 than JISF’s forecast at 115.5 million tonnes. Mr. Bada said the federation doesn’t revise the forecast now despite of the low-key estimated for export. He said the output depends on supply and demand balance and inventory level though Japanese steel makers’ output capacity increased due to expansion including larger blast furnace capacity. Mr. Bada expects Japanese steel makers will increase the capital expenditure in fiscal 2007 and the value should be very high. He said JFE Steel will increase the expenditure in working finish base significantly though he doesn’t make up expenditure value for other makers. Mr. Bada said raw materials and freight cost increased by around 700 billion yen in fiscal 2006 from fiscal 2005 for Japanese steel industry. He expects the cost will increase by around 700 billion yen mainly for ferrous scrap and nonferrous metals for fiscal 2007 from fiscal 2006. He said the industry cannot cover zinc cost only by own effort. He said the steel makers should pass the higher cost on selling price when galvanizing steel output increases though each maker should decide the own price policy.