Kobe Steel to Rise Output to Meet High Grade Steel Demand

Mr. Tomoyuki Kaya, senior officer of Kobe Steel said the firm plans to increase the raw steel output to 7.6-7.7 million tonnes to meet higher demand for high grade steel products fiscal 2006 ending March 2007 compared with 7.56 million tonnes in fiscal 2005 when the firm reduced the output to reduce low price commodity grade steel export. Mr. Kaya said the contract price for high grade products is still lower level than prices for distributors. He said the firm tries to improve the contract price to cover research and development cost and the higher value along with higher cost price including zinc. Mr. Kaya warns the domestic hot, cold and coated sheet steel inventory is still higher than 4 million tonnes though the stock decreased to 4.04 million tonnes at the end of June. He said Kobe Steel tries to keep the sheet supply low level while the buyers could try to build inventory under expectation for higher market price. Mr. Kaya expects domestic demand keeps firm when domestic automobile output will increase to 11 million units of finished car and 8 million units of knockdown sets for fiscal 2006 from 10.9 million units and 7.7 million units in fiscal 2005 and shipbuilding volume increases to more than 16.5 gross ton from 15.7 million gross ton. He estimates the higher activity by users lifts the domestic steel demand by 600,000-700,000 tonnes for carbon steel and by around 150,000 tonnes for special steel in fiscal 2006 from fiscal 2005.