Japan Integrated Steels Continue Price Talk with Contract Users

Japanese integrated steel makers would conclude contract steel price negotiation for second half of fiscal 2011 ending in March 2012 in and after January. The steel makers failed to fill the recognition gap with domestic contract users including automobile makers and electronics makers while the steel makers agreed with some users including office automation equipment makers to leave the price for October-December unchanged as the price in July-September and to adjust the price for January-March depending on lower raw materials cost.

Some users seek to reflect historical high yen rate to the steel price for the second half year when the yen rate keeps less than 80 yen per US dollar.

The integrated steel makers and contract users are talking on the price negotiation based on US$ 167 per tonne of iron ore cost and US$ 285 of coking coal cost for October-December. The raw material cost decreases to around US$ 144 for iron ore and around US$ 235 for coking coal for January-March. The cost is lower than US$ 171 of iron ore and US$ 330 for coking coal for April-June and US$ 169 of iron ore and US$ 315 of coking coal for July-September.

The users require wider steel price cut under lower raw material cost and additional lower cost under historical high yen rate. The integrated steels appeal their severe situation when they lose money in steel business due to delayed raw materials cost decease under lower steel output than the original plan caused by Thai flood. The price talk could take more time to fill the gap.