Steel Industry Needs Price Hike to Share High Input Cost, JISF Top

Japan Iron and Steel Federation’s chairman Shoji Muneoka emphasized at monthly press conference the steel industry has to ask higher steel price to cover higher cost of raw materials and energy. The president of Nippon Steel said steel makers try to cover the higher raw materials cost by own effort including more use of lower grade and priced materials but the makers expect steel buyers and consumers share the higher cost while he concerns inflation for resources under deflation for consumer goods and downstream products. He also notes such higher resource cost results in transfer of national wealth to resource rich countries and resource companies.

Mr. Muneoka said with higher demand in China and India, tight supply is main reason for the higher cost for raw materials and energy. However, resource companies’ attitude changed to maximize short term profit recent years and the change also contributes to the higher commodity prices.

Mr. Muneoka said Japanese steel industry continues the effort to prevent proposed integration of Western Australian iron ore production by 2 iron ore majors, which results in higher supply concentration. He said the steel industry provides full cooperation to antitrust authorities’ investigation and reports concern on abuse of dominant bargaining position at the iron ore price negotiation.

Mr. Muneoka said Japanese raw steel output would keep annual 100 million tonnes level through the year when he expects current situation will continue for months. He said economy condition gets better while the growth rate is expected not to jump and the situation is totally different between firm offshore demand and slow domestic demand and between firm domestic manufacturing demand and slow domestic construction demand. He warns depending on government policy including eco-point and other stimulus package, the manufacturing demand could slow.

Mr. Muneoka said as president of Nippon Steel the firm couldn’t disclose annual earnings outlook at annual results announcement next week when the firm cannot see future raw materials cost and steel price is also under negotiation while the firm didn’t decide the announcement yet.