Sumitomo Metals to Hike Automotive Galvanizing Sheet

Sumitomo Metal Industries will seek contract price hike for automotive galvanizing flat steel to Japanese automakers including Toyota Motor. Sumitomo Metals tries to cover higher cost of raw materials including surging zinc price through maximum 5,000 yen per tonne hike depending on the metallic coating weight from October. The firm tries to realize the hike for 4 years in a row. Japanese steel industry expects the raw materials and energy cost will increase by around 300 billion yen for fiscal 2006 ending March 2007 from fiscal 2005 due to higher cost for iron ore, zinc, nickel and crude oil. Especially the zinc price is US$ 3,000 per tonne in the year compared with the 10-year average of around US$ 1,000. Sumitomo Metals decided to hike automotive galvanizing sheet price when the firm cannot cover the short-time surging higher price only by the own effort and the structural zinc shortage is expected to continue. The firm already hiked galvanizing sheet price for construction and pipe applications. The firm tries to realize the higher automotive sheet price under tight sheet steel supply when automakers expand the production including offshore output and knockdown sets though automakers could resist the price hike.