Nippon Steel Wins 5% Hike for Shipbuilding Plate

Nippon Steel concluded the negotiation with shipbuilders to increase the plate price by around 5% effective on January shipment after the long run talk since July, according to sources. The steel maker and the users finally reached the agreement though the steel maker sought the hike to cover higher cost of raw materials and freight while the shipbuilders resisted the hike due to lower ship price for the order backlog. Nippon Steel tries to seek another hike for the year starting April 2007 to cover higher production cost and improve the relative lower domestic price than international level. Nippon Steel offered 5,000 yen per tonne of hike for October shipment earlier. The shipbuilders resisted the hike after they accepted hikes for 3 years in a row along with the loss making operations and lower priced order backlog. However, the users decided to accept smaller hike at around 5% for January shipment when they need the stable supply of plate to meet strong demand. Nippon Steel also agreed to the smaller hike. The price hike is the first increase after October 2005. The price will increase by total 20,000 yen per tonne during the hikes for 4 years in a row. Nippon Steel will seek additional hike for shipbuilding plate for the year starting April 2007 when shipbuilders are expected to improve the profitability and the cost of steel making raw materials including iron ore and freight increases. The firm also tries to improve the domestic price toward the international level.