Nippon Steel, Japan’s largest integrated mill, has decided to add Yen 10,000/tonne ($91/t) to its flat steel prices for July deliveries to spot buyers including re-rollers, or the third consecutive month with price increases, which is due to supply tightness, higher input costs, and the efforts to narrow the price gap against the global market, a company official confirmed on Friday.
“We cannot afford to wait for the previous price increases to be fully accepted, and further price hikes are vital for us to maintain a stable supply,” the official said, and the price rise applies to hot-rolled, cold-rolled, pickled and oiled, and galvanized coils and sheets, she confirmed.
So far, the three-month price increases have added a total of Yen 30,000/t onto hot rolled coil (HRC) and sheets, and Yen 35,000/t on other flats, according to Nippon Steel’s pricing policies.
A Tokyo-based distributor had expected Nippon Steel’s third round of price rise to be more substantial especially when the producers have been complaining about product cost rises repeatedly, but he had not expected it to be in July.
“We have not had the experienced for steel producers to raise their prices sharply for three months in a row, and this had made it very tough for us to pass on the added prices to the buyers completely and quickly,” he lamented.
Nippon Steel does not release its exact list prices, but as of June 4, SS400 grade 1.6mm thick HR cut sheet (1,219×2,438mm) are transacted at Yen 102,000-105,000/t in the spot market in Tokyo, up Yen 7,000/t on month, and SPCC grade CR cut sheet (914×1,829mm) at Yen 116,000-120,000/t, up Yen 10,000/t on month, market sources confirmed.
Meanwhile, Japan’s flat steel consumers seem to be lacking any alternatives but to buy domestically, a Tokyo-based steel trader noted.
“Importing is not a choice, as overseas supplies are also tight, and Japan is not attractive either with its lower buying prices than the other countries, so sellers would rather sell elsewhere,” he explained.
The latest available data from the Japan Iron & Steel Federation did show that Japan imported about 3.43 million tonnes of HRC over January-April, or down 15.8% on year.
“Japan’s supply will appear tighter with the rather firm demand and lower imports, and to buyers, it will be either you pay the asking price, or you do not get what you want, simple as that,” the trader added.
As for customers under long-time supply deals such as automakers, a sharp price rise may be on the way too after a series of negotiations, the company official disclosed.
“We cannot keep selling to this group of customers at discounted prices, and they need to understand our situation too, so a sharp price increase may be needed or we have to allocate the supplies to the other customers,” she emphasized, declining from sharing any details regarding the negotiations, as they are “confidential”.
Market sources understand that Japan’s integrated mills and automakers are negotiating auto sheet prices for April-September.
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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