Nippon Steel Keeps Flat Steel Output Reduction for Domestic Dealers

Nippon Steel will keep the domestic flat steel supply for distributors in and after July after the firm reduced the supply by 100,000 tonnes for sheet steel and 50,000 tonnes for plate in April-June and by 500,000 tonnes for sheet and 50,000 tonnes for plate in second half of fiscal 2005. The managing director Kiichiroh Masuda said the firm is still cautious to increase supply though the domestic sheet inventory is getting to normal level of 4 million tonnes by the end of June. Mr. Masuda said the firm tries to increase the export price to FOB US$ 600 per tonne for hot rolled coil to Asian market in July-September when the price increases to more than US$ 550 in eastern Asia in July-September from current US$ 500 and the hot coil price increases to US$ 680 in July order in USA and to more than US$ 600 in Europe. He said the firm keeps the export to the level of actual demand with cautious for overstocking.Mr. Masuda said Nippon Steel expects the cost of raw materials and freight will increase by more than 300 billion yen for Japanese steel industry in fiscal 2006 from fiscal 2005. He said the firm is forced to increase the steel selling price depending supply balance and international prices for each items while the firm will try to absorb some of the higher cost by own effort. He emphasized especially surging zinc price hits serious impact at 5,000-30,000 yen per tonne depending on products. The firm and subsidiaries started the negotiation with users to pass the higher zinc cost on the selling prices. Mr. Masuda said Nippon Steel expects Japanese steel consumption will increase in fiscal 2006 started April after the demand increased by around 1 million tonnes to more than 77 million tonnes in fiscal 2005. The demand will increase by 600,000-700,000 tonnes for manufacturers while the demand decreases by 300,000-400,000 tonnes for construction.