JFE Steel Suffered Higher Raw Materials Cost

JFE Steel revised the estimation of cost up for raw materials, energy and freight to 830 billion yen for fiscal 2008 started April, which is 30 billion yen higher than original estimate in April mainly due to higher Australian iron ore settlement. The firm expects the cost could increase more depending on market for ferrous scrap and ferroalloy. The firm tries to improve the steel selling price depending on the market condition and supply balance while the firm tries to improve the stable long term procurement including certain investment for mining. JFE Steel expects the cost up is 630 billion yen for iron ore and coal and 200 billion yen for scrap, ferroalloy and freight. The firm expects the cost could increase more when the market price for scrap and ferroalloy keeps increasing. The firm tries to pass the higher cost on the steel selling price as much as possible. The firm already increased the selling price for certain products to cover the higher cost but the price for second half of fiscal 2008 is unsettled for quarterly and half year contract. The firm tries to pass the higher cost depending on items, applications, supply balance, international and negotiation timing. The firm focuses on securing requirement to meet growing consumption for higher output mainly of high valued steel products when the firm expects the higher raw materials cost could continues for 2, 3 years. The firm invests to mining assets aggressively more than before to secure materials stably under sellers’ market while the firm tries to improve the technology to use lower grade ore and coal to expand the available resources.