JFE Steel Restarts Major Price Talks with Buyers

JFE Steel restarted steel price negotiation with buyers at home and abroad for April-June while the talk was stopped for many buyers due to users’ production stoppage after the major earthquake. The firm decided to increase the selling price to secure reproducible profit for stable supply to steel users when quarterly cost increased by around 25% to US$ 171 per tonne for iron ore and by 47% to US$ 330 from January-March and coking coal cost increased for emergency procurement after Australian flood. The firm seeks around 20,000 yen per tonne of price hike for domestic distributors, rerollers and manufacturers including automakers, appliances makers and shipbuilders while the firm seeks US$ 250-300 per tonne for export depending on items.

However, the price talk is uncertain at home and abroad. Japanese automakers and other major steel users increase the resistance for the higher steel price when the manufacturers reduce the operation significantly after the quake. The firm tries to inform severe raw materials situation for users’ understanding for the major cost up while the firm eyes potential supply adjustment to improve the supply balance.

Offshore steel market is slow since late February when China and other Asian countries tightened financial policy to fight inflation while the market price increased driven by expectation for higher raw materials cost through mid-February. The market price shows sign to recover in China especially for construction materials. POSCO of South Korea announced 160,000 won per tonne of price hike effective order on April 22 to cover higher raw materials cost. POSCO’s price increased to 1.06 million won or around US$ 970 for hot rolled coil and 1.11 million won or US$ 1,200 for plate. Asian market price would hit bottom when Chinese steel makers also show sign to increase the price.

JFE Steel realized US$ 50-100 per tonne of hot coil price hike for April shipment. The firm tries to increase the price more for May and June shipment under the better market condition. The firm tries to keep stable steel supply even when East Japan works could reduce the output due to limited power supply around Tokyo. The firm expects the export rate in value would exceed 50% of total shipment value in April-June due to potential shipment down for domestic users.