Zinc Price Increase Hits Japanese Galvanized Steel Makers

Zinc price increase is continuing. Japanese official zinc price increased by about 130,000 yen or about 80% per tonne since for one year from the end of January, 2005. Especially, the price rose suddenly from October, 2005 and increased by 100,000 yen or 50% for 4 months. Consequently, the hot dip galvanized steel makers who galvanize pipes and buildings, and the galvanized steel sheet makers are suffering from cost pressures.The amount of zinc ingot used the galvanizing of the structuring per tonne is at 50 kilograms per tonne and that of the pipe is 60 kilogram per tonne, according to the hot dip galvanized steel makers. It seems that the cost up rate of them by increasing zinc price become around 5,000-6,000 yen per tonne as far as the price increase from October is concerned. According to Japan Hot Dip Galvanizing Association, the amount of the hot dip galvanizing production by the association’s members in fiscal 2004 was about 1.47 million tonnes. If the amount for 6 months in October 2005-March 2006 would be 750,000 tonnes, it is expected that the cost up rate of the association’s members would be at around 4 billion yen. As for the galvanized steel sheet makers who make the zinc alloy and aluminum coated steel sheets, their situations are more serious. The aluminum price is rising, in addition to the rising zinc price. The aluminum market price of LME (London Metal Exchange) jumped up to around US$2,450 per tonne from at US$1,800 per tonne in October 2005. Some steel maker said that the cost increase ratio would become around 3 billion yen. The steel makers analyzed their profit in the latter half of the fiscal year may fade away by the zinc and aluminum price increases.The galvanized makers came out with the hike of their processing charge at 3,000-5,000 yen per tonne in the end of last year. Furthermore, they are performing the hike by 5,000-8,000 yen by the zinc prices. The steel makers seem to consider the hikes of the selling prices of the galvanized steel sheet products.