Japan Major Steels to Win 13,000-17,000 yen/t Sheet Hike in 1H

Japanese integrated steel makers are concluding sheet steel price negotiation with major uses including makers of automobile, appliances and construction materials for April-September when the steel makers are setting iron making raw materials cost for July-September. The negotiation was started in April after supply chain trouble caused by the major earthquake. They are talking to increase the steel price by 13,000-17,000 yen per tonne compared with second half of fiscal 2010 ended March 2011 while the price depends on the users. Some buyers already accepted the higher price and the negotiation will finish in the month.

Japanese steel makers pay US$ 171 per tonne for iron ore and around US$ 330 for coking coal for April-June, which is around 25% and near 50% higher than January-March level. The cost is flat for iron ore and will be around US$ 315 for coking coal for July-September. The steel makers’ cost increases by around 14,000-15,000 yen per tonne of steel products. The makers offered around 20,000 yen per tonne of steel price hike when they cannot cover the extremely higher cost only by their own effort.

The steel buyers resisted the wide hike when their production was unstable after the quake. However, they are starting to accept certain hike when resource price increases worldwide. Japanese integrated steel makers posted loss in real terms for January-March. With the certain price hike for the first half of fiscal 2011, the steel makers’ profitability is likely to be still severe due to higher cost for raw materials and energy.