Japan Iron & Steel Institute Requires Relief Measure against Recyclable Energy Buyback Program

Mr. Eiji Hayashida, chairperson of Japan Iron & Steel Institute, attended a general meeting of Democratic Party’s growth strategy and economic policy project team on Wednesday and required for introduction of relief measure or electric power surcharge system along the government’s buyback program for recyclable energy. Mr. Hayashida explained the program will impact electric furnace steel makers’ operations due to upsurge of electric power cost. Mr. Kengo Fukaya, vice president of Daido Steel, and Mr. Yoshitaka Minami, president of Tokyo Kotetsu, also appealed the impact by the program.

Mr. Hayashida explained electric furnace steel makers can continue operations by doing 80% productions in night time and contribute to electric-load leveling and lower consumption of fossil fuel. But the program may impact their business sustainability as well as employment and local economy. Mr. Hayashida suggested a metered rate surcharge system and selectivity day-and-night electric surcharge system.

Mr. Fukaya said if the program is commissioned, Japanese 7 electric furnace special steel makers may reduce recurring profit by more than 30% and other 3 makers turn into recurring loss among 12 major makers. Mr. Minami explained Japanese major electric furnace carbon steel makers consume 60% of Japanese total ferrous scrap generation at 40 million tonnes and contribute to recycling system.

Democratic Party will submit the program to the Diet in fiscal 2011. The government aims to introduce the program as well as CO2 emission trading and combat global warming policy tax. The institute pointed out cost up of Japanese steel industry is estimated at total 36-97 billion yen per year by the tax and the program and the program would lower international competitive power and domestic operation’s sustainability of Japanese steel industry.