Japan Car Makers Accept 13,000 yen/t Special Steel Bar, Wire Rod Price Hike

Japanese integrated steel makers almost agreed with car makers to increase special steel bar and wire rod selling price by around 13,000 yen per tonne for first half of fiscal 2011 ending in March 2012 from second half of fiscal 2010. The car makers accepted higher steel price to secure stable steel purchase volume while the range of price increase differs depending on item and user. The integrated steels increase the output to full capacity operation for second half of fiscal 2011 when the car makers increase the output.

The car makers accepted the special steel price increase for first half of fiscal 2011 while the makers continue the price negotiation on material to supply for car parts suppliers. The steel makers tried to increase the steel selling price when the profit decreased due to higher steel making material cost.

The car makers increase the output for second half of fiscal 2011 to cover the output decrease after the major earthquake in first half of fiscal 2011. Special steel supply rapidly gets tight when the steel inventory remains low at integrated steels and special steel making electric furnace steel makers.

Domestic car output was estimated to be around 5.5 million units for second half of fiscal 2011. However, one integrated steel source sees the car makers increase the special steel purchase requirement when car makers revised up the production plan for January-March 2012. Some integrated steel makers increases the capacity of finishing line when the demand could increase more than expected.