Japan Major Steels to Raise Sheet Steel Price for Dealers

Japanese integrated steel makers started to study potential price hike for hot, cold and coated flat steel for domestic distributors in as early as May shipment. They try to improve the profitability.

Their iron ore and coking coal cost will decrease in April-June from January-March but the cost is same level as fiscal 2010 ended March 2011. The steel makers lose money for the sheet steel sales to the domestic dealers due to decreased market price since 2011. They try to improve the selling price level when the raw materials cost keeps relative high at fiscal 2010 level.

The makers couldn’t increase the price for the dealers due to higher import under high yen rate and competition with cheaper electric furnace steel product.

Tokyo Steel Manufacturing announced 2,000 yen per tonne of price hike for April order under recovering offshore market. Offshore makers including China Steel of Taiwan and POSCO of South Korea also increase the selling price to Japanese buyers for May shipment.

Domestic sheet steel demand also improves. Japanese automakers revised the domestic production plan upward under higher domestic sales thanks to subsidy for eco-friendly vehicle. Japanese building start application increased for 2 months in a row in year to year basis through February. The demand apparently increases for C channel due to higher activity to build warehouses.

Domestic hot, cold and coated steel stock held by the makers, distributors and coil centers decreased for 2 months in a row through February in month to month basis. The stock is estimated to decrease to less than 4 million tonnes at end of March.

The dealers could resist the price hike attempt. However, they have some stock out sizes under the inventory adjustment. Some of the dealers already started to improve the reselling price with expectation for higher cost price.