JFE Steel to Raise Steel Pipe Price for Shipbuilding

JFE Steel started price negotiation with Japanese shipbuilders to raise steel pipe for shipbuilding for shipment in fiscal 2007 started April JFE Steel requests the hike by 8-10% compared with the end of March for all steel pipe products including seamless tube and welded pipe. The firm seeks to improve extra charge as well as base price hike. The firm aims to reach agreements with the users in April-June.Steel pipe demand for domestic shipbuilders is approximately 120,000-130,000 tonnes per year. JFE Steel holds top share in domestic market. The firm has revised up steel pipe selling price for the users other than shipbuilders to reflect higher material costs, while the hike was relatively slower for shipbuilders so far. JFE Steel’s steel pipe department source said the profitability became much worse for shipbuilding pipes when the firm cannot absorb increasing material costs.Steel pipe orders are recently increasing by 10-15% from domestic shipbuilders when the shipbuilders continue high operations with order backlogs for over next 3 years. Domestic steel pipe supply is tight. Another background is that price negotiation was finished between Japanese steel plate makers and shipbuilders. JFE Steel will raise the selling price for better profitability in these situations.JFE Steel raises the selling price of seamless steel tube for shipbuilding for 4 consecutive years and that of welded steel pipe for the first time in 2 years. At the same time, the firm reviews extra charge for all size galvanized steel pipe under the influence of higher zinc price. The firm also examines extra charge for special sized products for small lot orders.