Nisshin Steel to Hike Stainless Contract Price for 2H

Nisshin Steel tries to shift the stainless steel contract price mechanism to reflect change of cost price smoothly for the second half of fiscal 2006 ending March 2007. The firm will improve the profitability when nickel price surged to record US$ 12-13 per pound at London Metal Exchange. The firm tries to pass the higher cost price earlier than traditional 6-month price revision.

The firm tries to increase the selling price of nickel series stainless products to appropriate level when higher nickel price increased the production cost by around 70,000 yen per tonne. The firm, for which the sales for contract users represents 80% of the domestic stainless sales, tries to improve the conditions to improve the profitability under surging raw materials cost.

The firm also expands the original stainless steel product, DNA-SUS for the second half. The firm will increase the sales from current 30% of the total stainless sales to 35% in fiscal 2008 expanding to 40% in future. The firm also tires to expand the sales of original chrome series stainless products.

The firm keeps the stainless export at around 25% of total stainless sales for fiscal 2006 after the firm reduced the export by 70% in fiscal 2005 from fiscal 2004. The firm expects domestic stainless demand will keep firm in the second half of fiscal 2006. The firm forecasts worldwide tight supply will continue for the second half when Chinese stainless makers reduce output and fire at a major European maker reduces supply.

The firm tries to shift higher valued products for the stainless business under the 3-year plan to fiscal 2008 when Chinese large capacity expansion is expected to result in oversupply worldwide. The firm expects the oversupply will continue until 2012 along with high level of raw materials cost.