Japan Steel Industry Supports Inflation Target

Japan Iron and Steel Federation’s chairman Eiji Hayashida said at monthly press conference on Wednesday Bank of Japan showed strong intention to fight deflation and normalize yen exchange rate from historical high level through announcement of virtual inflation target. He urges Japanese government’s best effort for revival of Japanese economy.

Mr. Hayashida said yen exchange rate is still severe for Japanese steel industry while the rate temporarily marked 80 yen per US dollar on Wednesday. He said the rate would not increase under current situation in Europe and USA while he views the reasonable rate is more than 90 yen for current Japanese economy.

Mr. Hayashida said steel market price bottomed in Asia after Chinese New Year holidays in late January but the price increase is slow. He said world raw steel production decreased by 7.8% in January from a year earlier due to remaining impact of European financial crisis. He said the slow economy could continue for first half of 2012. He said Japanese steel import would remain high under historical yen rate and steel market condition but the import would not increase to higher level.

Mr. Hayashida also warns higher cost and unstable supply of electricity could encourage Japanese industry to shift to offshore production. He expects Japanese government will restart idling nuclear power plants after process to check safety and get local communities’ support.