Nisshin Steel to Cover High Zinc and Nickel Cost

Nisshin Steel decided to increase the selling price of galvanizing steel for construction for July shipment starting negotiation with the buyers. The firm increases the price by 10,000 yen per tonne for thicker products used for general construction and by 20,000 yen for thinner products used for roof and wall. The firm also tries to increase the selling price of nickel series stainless flat steel. Zinc price tripled in 3 years after the surge since autumn in 2005 though the price decreases recently. Nisshin Steel estimates the higher zinc price would result in around 10 billion yen of higher cost for the firm in fiscal 2006 started April from fiscal 2005 even at US$ 3,000 per tonne of zinc price. The firm considered the transferring of the higher cost to the selling price when the firm cannot absorb all of the extra cost by cost cutting effort when the firm has limited zinc inventory and the zinc price increase reflects to the production cost immediately. The firm increases the selling price of galvanizing steel by 10,000 yen per tonne for construction use with thicker gauge and by 20,000 yen for products with around 0.3 millimeters thick for July shipment. The firm also increases the colored galvanizing steel price. The firm keeps studying US makers’ price system to introduce zinc surcharge price mechanism depending on the volatility of zinc price. The firm will increase the selling price of nickel series stainless flat steel both for distributors and contract users to cover higher nickel price. The firm estimates the higher nickel price costs 10 billion yen more for fiscal 2006 from fiscal 2005 when nickel price keeps as high as US$ 8 per pound though the nickel price decreases recently. The firm tries to pass the higher cost price immediately increasing the selling price by 30,000 yen per tonne for distributors. The firm already offered 20,000-30,000 yen of price hike for contract users since April and some users are accepting the hike. However, the firm prepares 20,000-30,000 yen of additional hike to cover higher nickel cost at US$ 8 per pound of nickel price.