Metal Cost and Slow Demand Suffer Japan Coated Steel Makers

Profitability turns much worse in the half year to March 2006 at Japanese makers of steel sheet for construction materials, such as galvalum steel sheet, which is coated steel with 55% aluminium and zinc alloy, and galvanized steel. Their material costs seem to increase by 5,000 yen per tonne of steel sheet with the soar of zinc and aluminium prices since October 2005. Additionally the shipment became slower due to the heavy snowfall in Japan. Makers barely maintain the price level with severe output regulation as much as the immediate needs. However, their profits are decreasing significantly with the increasing material costs and the decreasing sales.Steel sheet makers have not put the higher cost on their selling prices after October 2005, though they usually revise their selling prices every half fiscal year. The higher zinc and aluminium prices soar, the worse makers’ profitability becomes.AK Steel, the major integrated steel maker in U.S.A., announced it revises the extra margin for zinc coating by 70% in April 2006. Overseas steel sheet makers hurry to put the increasing zinc costs on their selling prices. Japanese sheet makers could do such action to cover the higher cost of zinc and other metals.