Nippon Steel to Seek 20,000 yen/t Higher Sheet Steel Price

Nippon Steel announced on Monday the firm increases the selling price of hot, pickling, cold and coated sheet steel by 20,000 yen per tonne or 20-30% for distributors, rerollers, pipe makers and drum can makers for April shipment to improve the profitability. The firm already increased the price for January and February for distributors and for February for rerollers. The firm decided to improve the profitability when the raw materials including iron ore, coking coal and ferrous scrap increases widely in April-June while the higher cost would be much more then cost cutting effort. The firm tries to increase the selling price by 20,000 yen for domestic contract users.

Raw materials cost surges for ore and coking coal partly due to bad weather since December. The quarterly iron ore price is expected to increase to US$ 170-180 per tonner for April-June, which is around 30% higher than January-March level under the formula to reflect spot market price. The coking coal price is expected to increase widely when a mineral major seeks price revision system in monthly or each vessel.

Japanese steel makers sought 3,000-5,000 yen per tonne for price hike for contract users for second half of fiscal 2010 ending March 2011 to cover higher raw materials and energy cost. However, the users resisted the wide hike under higher yen rate. The steel price increased by only near 20,000 yen per tonne for fiscal 2010 from fiscal 2009.

Nippon Steel tries to increase the selling price under the strong demand and tight supply under strong economy growth in Asian countries along with higher raw materials cost. Japanese steel market price increased when Tokyo Steel Manufacturing increased the selling price and the import price increased while offshore market price increased by US$ 150-200 per tonne from end of 2010.

However, the steel makers could experience hard time to get the higher price when the price move is separated depending on the demand segments and areas in Japan and Japanese steel users resisted to wide hike for 2 years in a row.