Higher Raw Materials, Freight Hit Japan Major Steels

Japanese integrated steel makers are suffered from higher cost for raw materials and freight. Nippon Steel revised the cost impact upward to 100 billion yen for fiscal 2007 ending March 2008 compared with fiscal 2006 though the firm expected 80 billion yen of cost up before. JFE Holdings and Sumitomo Metal Industries also revised upward to 16 billion yen and 20 billion yen respectively. They try to cover higher cost through price hike and cost cutting effort. Chairman Hajime Bada of Japan Iron and Steel Federation, who is president of JFE Steel, said at monthly press conference in April Japanese industry would pay 700 billion yen more for raw materials, energy and freight fiscal 2007 from fiscal 2006. The cost increases for manganese, molybdenum and freight in April-June while nickel ingot price plunged from the peak in mid-May. The steel makers revised the cost estimate upward when they announced April-June results in July. Sumitomo Metals said the cost increases by 80 billion yen in fiscal 2007 from fiscal 2006 though the firm expected 60 billion yen cost up as of April. JFE Holdings now expects 36 billion yen of cost up compared with 20 billion yen cost up originally. Kobe Steel said the cost incases by 10 billion yen from fiscal 2006. Nisshin Steel said the cost could increase for freight and manganese though the original estimated 71 billion yen of cost up could decrease due to the lower nickel price.