Japan Steel Makers Start Sheet Price Negotiation between Automakers

Japanese integrated steel makers are likely to start price negotiation with automakers including Toyota Motor Corporation and to aim some price hike for steel sheet. Integrated steels expect to pass increasing material costs on steel sheet selling price when they agreed with major iron ore suppliers including CVRD to purchase iron ore at 19% higher price in fiscal 2006 from the previous year and other raw material prices also surge such as zinc and crude oil. Integrated steels could realize steel sheet price hike for 4 straight years if they succeeded in the negotiation. However, automakers would not accept price hike readily and the negotiation might make slow progress.Steel sheet price for automobile recently increased 4 times, in fiscal 2003, the first and second half of fiscal 2004 and fiscal 2005. Japanese integrated steels’ iron ore purchasing price jumped by about 70% in fiscal 2005 from fiscal 2004 and by 19% in fiscal 2006 when raw materials supply became short worldwide due to Chinese economy expansion. Additionally zinc price has sharply increased, which is used for surface treated steel sheet, and steel makers face serious cost up pressures.