JFE Steel to Hike Plate by Over 20% for Dealers

JFE Steel increases selling price of plate steel by more than 20% for the distributors for March order. The firm already started to notify plate dealers of the hike. The firm tries to improve the profitability through the hike under higher raw materials cost and tighter plate supply. The firm eyes additional price hike depending on the raw materials situation.

JFE Steel anticipates raw materials cost should increase widely in April-June when spot market price of iron ore and coal surges. Especially coking coal market price, which is higher than annual contract price for fiscal 2008 ended March 2009, is historical high due to heavy rain damage on Australian coal mines while iron ore market price is historical high.

Japanese plate demand is still firm for construction and industrial machinery. The offshore demand is also strong mainly for infrastructure in Asia and energy sector.

JFE Steel expects the full capacity operation of the plate mills will continues for foreseeable timeframe. The firm expects domestic plate supply would get tighter in first half of fiscal 2011 when Japanese plate makers plan full scale maintenance.

The makers’ price hike would encourage distributors and processors to increase the reselling price. Plate processors’ inventory was normal level of around 1.9 months for the shipment at end of December 2010, according to the processors’ group. Japanese steel building demand, which was very slow for years, started to recover since July 2010. The market price in the dealers and processors’ transaction would increase more under the higher demand and better supply balance.