Japanese Steel Makers Agree in Steel Sheet Price Down by 5,000 Yen/t with Large-lot Users

Japanese integrated steel makers and large-lot steel sheet consumers, including automobile makers and electric appliance makers, are entering the final phase of price negotiations for October 2011-March 2012. Integrated steels and Toyota Motor almost agreed in steel sheet price down by average 5,000 yen per tonne or 5% for October-March from April-September 2011. Integrated steels also seem to have agreed in price down by the same range with office appliance makers. These results reflected raw steel material cost down for January-March. Integrated steel makers will progress price talks with other large-lot users along the indicator of price down by around 5,000 yen.

Integrated steels could increase steel sheet price by 13,000 yen for April-September 2011 from the previous half year. The price would downturn again. The price down range is as wide as 15,000 yen at the yearly price talks in fiscal 2009. Integrated steel makers seem to have posted actual losses in their steel business divisions currently due to low overseas market prices. Profitability is unlikely to improve when the market price maintains weak and the latest price negotiations result in decline with large-lot users.

Integrated steels’ raw material purchasing prices lowered to US$ 144 per tonne for iron ore and to US$ 235 per tonne for coking coal in January-March. The prices were US$ 167 and US$ 285 in October-December. Iron ore price was US$ 171 in April-June and US$ 169 in July-September. Coking coal price was US$ 330 and US$ 315. Steel sheet users required wide-range price cut against steel makers to reflect raw material cost down and high yen rate.

Steel makers insisted that they haven’t passed raw material cost upsurge fully on the sales price of steel products and that carry-over raw materials depress their profitability since their steel output plans were confused by flood in Thailand or weak overseas markets. However, steel makers were forced to approve a certain range of price cut in order to keep the market shares under tough sales competitions with overseas steel makers such as POSCO.