Japanese Electric Furnaces Suffer Triple Cost Up in F2012

Japanese electric furnace carbon steel makers will suffer cost up for substantial materials including graphite electrode and crude oil in and after April. Additionally, electric furnaces around Tokyo would face electricity cost increase by total hundreds of millions of yen per year due to price hike by TEPCO in April. Electric furnaces should reinforce sales stances to secure their profits and keep fair spread between ferrous scrap cost and steel product selling price. Steel makers around Tokyo are likely to launch price hike effective in or after April to pass cost upsurge.

Tokai Carbon, Japanese major electrode maker, decided to raise the sale price of graphite electrode by 5-10% or 40,000 yen per tonne for domestic users effective for April shipment. This is the first hike in 3 years when electrode supply is tightening worldwide and material prices are rising such for needle cokes.

Crude oil price maintains above US$ 100 per barrel due to supply uncertainty by Iran or political uncertainty of Syria. Higher crude oil price would cause higher distribution cost on steel makers. Liquid natural gas price is also likely to increase along with crude oil market price.

Additionally, TEPCO schedules electricity charge hike by 2.58 yen per kilowatt on and after April 1. Ferrous scrap market price currently hit bottom and rebounded. Carbon electric furnaces would suffer lower profitability if ferrous scrap cost continues to rise.