Japan Steels Fears Rising Material Cost in F2008, Mr. Bada

Chairman Hajime Bada of Japan Iron and Steel Federation announced at a monthly press conference on Friday material price and freight cost of Japanese steel industry is expected to increase by 800-900 billion yen through fiscal 2007 ending March 2008 compared with fiscal 2006. Mr. Bada said the costs increase by 700 billion yen on the press conference in April. But the cost is seemed to expand due to increased freight price or ferrous scrap price. The chairman anticipated the material negotiation with material suppliers would become severer in next fiscal year. The material issue is likely to be a serious problem for Japanese steel industry.Mr. Bada said on the conference in April the cost of material and freight for Japanese steel industry increased by about 700 billion yen in fiscal 2006 compared to fiscal 2005 while the cost in fiscal 2007 would be impacted at same level of fiscal 2006 mainly for non-ferrous metals or ferrous scrap price. After April, spot ocean transport cost repeated to renew the records. Long-term contracted ocean transport cost is increasing due to rising heavy oil price, too. Ferrous scrap price is also rising. Mr. Bada analyzed the increased cost pressure is now strong.Japanese integrated steel makers will start price negotiation of iron ore and coal with material suppliers for fiscal 2008 shipment at the end of this year. The suppliers are already explaining the situation to increase material price due to the shortage of port capacity and transport boat in tight supply for the material.