Japan Steel Industry Warns Higher Electricity Cost to Damage Industry

Japan Iron and Steel Federation’s chairman Eiji Hayashida said at monthly press meeting held on Wednesday production cost of steel industry will increases by around 20 billion yen per year around Tokyo if Tokyo Electric Power Company (TEPCO) increases power charge in April as the firm announced. The president of JFE Steel also said Japanese carbon steel export would remain 25 million tonnes per year for fiscal 2012 starting in April as recent pace compared with 27-30 million tonnes in recent years.

Mr. Hayashida said the higher electricity cost would increase the steel makers’ cost by 6-7 billion yen for electric furnace steel makers around Tokyo. He said the impact on electric furnaces by the price hike is more than 1.5 times of total recurring profit of major electric furnaces around Tokyo. He said Japanese industry will shift the production to offshore countries if Japanese other power companies follow the price hike of TEPCO.

Mr. Hayashida said Japanese carbon steel import would be around 5-6 million tonnes for fiscal 2012 as recent 5 million tonnes of pace. He said the import would not increase more than that level when Japanese users import for limited applications. He estimated steel demand for rebuilding activity in disaster area of the major earthquake is 500,000-600,000 tonnes for sheet pile and H-beam for civil work for fiscal 2012 and 1 million tonnes for construction in 5-10 years.