Hard Price Talks Occurring for Electric Furnace Electrode of F2009

Japanese electric furnace steel makers and electrode makers are likely to confront hard price negotiation for electric furnace electrode shipment in fiscal 2009 starting April. Japanese electrode makers are offering price hike for standard size products (14-24 inches) to 900,000 yen per tonne in F2009 from approximately 500,000 yen per tonne in F2008, to reflect the upsurge of needle coke cost. Electric furnace steel makers will request wide price cut against electrode makers when electrode supply is globally loosing and electric furnaces’ product shipment is decreasing due to worldwide economy recession. Both are suffered from productive cost expansion. Electrode price negotiation is expected to become harder for F2009 than usual years.

Japanese electrode makers’ selling price for electric furnace electrodes hit the bottom at 270,000 yen per tonne in F2002 and almost doubled to around 500,000 yen in 6 years. Material costs have risen, especially for needle coke, along the upsurge of oil price. Japanese electrode export price is currently reaching 750,000 yen per tonne. Electrode makers aim 900,000 yen for F2009 shipment. On the other hand, a source of Japanese electric furnace steel maker said electrode makers should decrease the selling price rather than the hike.

Electric furnace steel makers are forced to reduce their carbon steel and special steel product output by 50% or more. They are suffered from high cost rate by the production cut, though ferrous scrap price relatively lowered. A source of Japanese major rebar maker said they are trying to reduce productive costs even by 100 yen per tonne. Electric furnaces will propose wide price down against electrode makers.

The full-scale price negotiations for F2009 will start in February while some already started pre-talks. Both electric furnaces and electrode makers are showing strong stances with high productive and output cut costs. Japanese trader source expected the price decision might last into the end of March.