Japan Steel Industry Expects Higher Cost of Raw Materials in F2008

Chairman Shoji Muneoka of Japan Iron and Steel Federation said at monthly press conference on Monday Japanese steel industry’s cost could increase by 3.5 trillion yen for raw materials and energy for fiscal 2008 started April from fiscal 2007 due to higher settlement price for Australian iron ore. The president of Nippon Steel said the cost could increase by 500 billion yen from original estimate in early May though the cost is unsettled for part of iron ore and coal along with market price for ferrous scrap and freight. Mr. Muneoka said Nippon Steel could ask to the steel users to cover the additional higher cost. However, he said the price hike depends on the users and contracts while he said some of the annual contract price could be fixed already. Mr. Muneoka said the federation would cooperate to potential cost down for automakers by integrating the steel grades. He said the federation would response to request from Japan Automobile Manufacturers Association. Mr. Muneoka said steel industry should find the trend for ferrous scrap price, which dropped for the first time in 8 months. He said the firm steel demand could support the scrap market.