Nippon Steel has decided to add Yen 10,000/tonne ($91/t) to all its flat steel prices for September deliveries to spot buyers including re-rollers, Mysteel Global has learned. Japan’s largest integrated mill says it needs to transfer production cost rises to buyers, and in any case, supplies of flat products are tight in and outside of Japan and it wants to narrow the price gap with overseas competitors.
“Our previous increases were still not aggressive enough to offset the recent sharp rises in production costs,” a company official said on Thursday. “We’ll have to lift our prices further after the price adjustment for September deliveries,” she warned.
The company raised prices three times between May and July by a total of Yen 30,000/t for hot-rolled coils and sheets, and Yen 35,000/t for other coils and sheets, as reported.
Nippon Steel does not release its exact list prices, but as of July 29, deals involving SS400 grade 1.6mm thick HR cut sheet (1,219×2,438mm) were being negotiated at Yen 114,000-117,000/t in the spot market in Tokyo, up Yen 1,000/t on week and by Yen 7,000/t on month, market sources confirmed. SPCC grade CR cut sheet (914×1,829mm) is priced at Yen 132,000-135,000/t in dealers’ markets, up Yen 2,000/t on week and Yen 6,000/t on month.
A distributor in Tokyo said that inquiries for flat products have been extremely active, and prices are surging to accommodate the heaving increases of producers. “But these days, customers are asking the impossible (because) it’s difficult to secure the volume they need,” he lamented. “Even though some customers are offering to pay more, we cannot accept their order because we don’t have enough stocks to sell,” he complained.
A Tokyo-based flat steel trader expects Nippon Steel to raise its prices again soon, pointing out that flats demand from manufacturers including auto makers is seen improving further in the second half of the current fiscal year (October 2021-March 2022). “The mills will have to trim the supply volume for spot buyers further, which will exacerbate the existing supply tightness,” he predicted.
He added that the additional rise for Nippon Steel’s spot sales prices is a clear message and a warning to its long-term contract customers.
“The integrated mills (led by Nippon Steel) and the Japanese automakers are still negotiating April-September auto sheet prices, and these (prices) are generally lower compared with those for the spot market,” he explained. “But the recent sharp rise in production costs is making it difficult for mills to supply at lower prices, and Nippon Steel may be trying to pressure long-term contract customers to accept a large increase – otherwise ensuring stable supplies to them will become difficult,” he presumed.
The Japanese integrated mills and domestic electronics makers and makers of prefabricated homes had earlier agreed on a Yen 30,000-50,000/t rise for sheet prices in April-September, as reported.
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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