Nippon Steel Group to Pass Higher Zinc Cost on Selling Price

Nippon Steel and the group companies decided to increase the selling price of galvanizing steel products under the surging zinc price. They started the overture with users to increase the price for sheet, pipe, wire rod, plate, construction materials and other processed steels. The group tries to increase the price depending on the individual negotiations. Other Japanese integrated steel makers are likely to follow the move. Zinc market price surged since the end of 2005 with higher demand in China and speculative purchase. The price increased to US$ 3,084.78 per tonne at London Metal Exchange in April from 10 years average at US$ 1,000. The LME price continued to increase reaching more than US$ 3,900 in June. Nippon Steel estimates the Japanese steel industry’s cost of raw materials and freight will increase by more than 300 billion yen for fiscal 2006 started April compared with fiscal 2005. The firm sees zinc cost will increase by 80 billion yen and could increase more when LME price surged in short period of time and zinc supply is expected to keep short. Nippon Steel group decided to pass the higher zinc cost on the selling price at first. The managing director Kiichiro Masuda said the zinc cost increases 5,000-30,000 yen per tonne depending on the products. He said the group is forced to pass the higher cost on users to keep the stable production. Japanese major paint maker, Dai Nippon Toryo increased the selling price of paint with zinc by 20-30% effective on May 1. Japanese leading steel pipe maker, Maruichi Steel Tube increased the selling price of all galvanizing steel pipe products by 10,000 yen per tonne on June 1 and major reroller, Yodoko announced the firm will increase the selling price of colored galvanizing steel by 10,000 yen per tonne for distributors effective on July 1. Japanese manufacturers try to pass higher zinc cost on the selling price.