JFE Steel, Japan’s second largest integrated steel producer, has announced to raise the list prices of both wire rod and bar by Yen 15,000/tonne ($137/t) for July sales to all the buyers in and out of the country, a company official confirmed on June 2, explaining that buyers need to help shoulder the added production costs.
The price hikes apply to both carbon and special steel, and this has been the second time for JFE Steel to increase its longs prices after the Yen 10,000/t for January sales, Mysteel Global noted.
This is just one day after Kobe Steel, Japan’s third largest integrated mill, announced to raise its longs prices by Yen 5,000/t for July sales, or Yen 15,000/t increment since last October, as reported.
“JFE’s prices increases have been more substantial, though most market sources appear little surprised, and many, instead, think Kobe Steel’s adjustment too small to help much in transferring the cost,” a Tokyo-based steel trader commented.
His interpretation is that Kobe may want to achieve higher prices step by step, while JFE is more to imposing pressure on its long-term deal customers, as “progress in raising prices to contract customers has been much slower, one JFE wants to get it done at one go,” he said.
A second Tokyo-based trader agreed, estimating that long-term supply deal prices could be about 10-20% lower than spot prices, though no one knows for sure because of the confidentiality in long-term prices.
He noted that demand for special steel longs has been robust and most of the producers have been producing at their full capacities and the demand with increase further with possibly higher vehicle output in July, and “special steel longs sales are usually under long-term deals, so JFE is sending a clear message to the customers to agree on higher prices,” he said.
The latest available data from the Japan Iron & Steel Federation (JISF) showed Japan’s special steel longs sales in and out of Japan totalled 915,741 tonnes, up 46.4% on year and 6.3% higher on month.
On May 28, Eiji Hashimoto, JISF’s chairman and president of Nippon Steel, Japan’s largest integrated mill, also pointed out the urgency and necessity at a routine JISF meeting for long-term steel supply prices to be raised, or the domestic steel producers may not be able to maintain stable supply.
Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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