Friday, 26 Feb 2010
Dow Jones reported that JFE Steel Corporation will seek a price increase of around 30% for its key steel products for export in the April to June 2010 quarter, a move that is likely to weigh on production costs for manufacturers in Asia.

Mr Tsutomu Yajima SVP of JFE said that it will look to negotiate a USD 200 increase in hot and cold rolled steel sheets, which are currently priced at around USD 600 to USD 700 per tonne. The company's plan reveals the extent of the recovery in steel demand in China and other Asian countries, and that is likely to hurt manufacturers such as automakers and electronics companies through rising production costs.

He added that the new price proposal is entirely based on improving conditions in the global steel market, including the demand and production outlooks from Chinese steel mills, as well as inventory levels.

Mr Yajima said that the World Steel Association is forecasting a 7.6% increase in steel demand in Asia and Oceania in 2010, but the actual feel of the market is better than that estimate. Still, tough negotiations await JFE, Nippon Steel Corporation and other high end steel producers as coal and iron ore suppliers are also seeking a double digit hike in prices in the new contract year starting April.

He added that "It may be difficult to fully, if at all, reflect an expected rise in the cost of coking coal and iron ore in JFE's product prices in the quarter to June, but any sharp increase in input costs could be passed on from July. Just because raw materials prices go up, we can't tell steel users to simply accept price hikes."