Japan Iron Making Raw Materials Import Price Hits Record in July

Japanese iron ore import price increased by 38.0% to CIF 10,700 yen per tonne in July from a year earlier, hitting first CIF 10,000 yen level, according to data announced by Ministry of Finance on Thursday. The import unit price increased to 2.4 times at 32,400 yen for hard coking coal and by 83.5% to 60,800 yen for coke, which were first 30,000 yen and 60,000 yen respectively. The import value increased by 149 billion yen in July, which represents annualized 1.792 trillion yen, when the higher price lifts the import value. The import price is expected to increase more after August when the wide jump for the items is reflected gradually.The iron ore import value increased by 36 billion yen or 40% in July from a year earlier. The impact is annualized 433 billion yen when the price reflects higher price as Australian iron ore increased by maximum 96.5% for fiscal 2008 from previous year. However, the import unit price including freight could increase more when the iron ore price is more than FOB 10,000 yen per tonne for Australian fine ore. The coking coal import value increased by 98 billion yen or 2.2 times higher in July than a year earlier level. The annualized impact is 1.176 trillion yen. The unit price was 2.2 times higher at CIF 23,700 yen per tonne including semi-soft coking coal. The price could increase more when the semi-soft coking price increased to 3.7 times at around US$ 240 for fiscal 2008 from fiscal 2007 while the hard coking coal price already reflected FOB US$ 300 of annual contract price. The coke import price is expected to increase more when export price of China, which represents around 90% of Japanese coke import, reaches US$ 800 per tonne level after Chinese government increased the export tariff. Japanese steel makers reduced the dependence on import coke and the import volume decreased by 28.7% in July from a year earlier but the high price could impact on their iron making cost.