Japan’s biggest steelmakers are raising prices of the metal used in everything from cars to skyscrapers and warning of more to come.
JFE Holdings Inc.’s steel-making unit will raise prices by ¥20,000 ($160) a ton across all products from April to compensate for surging coking coal and iron ore costs, according to a spokesman at the company. Additional hikes are likely this year as transport costs are also rising, he said. JFE estimates its average steel prices were ¥115,000 a ton in the quarter through March.
Nippon Steel Corp., said it raised domestic prices of steel sheets — used in construction and electronics — by ¥10,000 a ton for May-delivery spot contracts. Japan’s biggest steelmaker, warned in a response to questions that more prices rises will be needed this year. Nippon has estimated its average steel prices at ¥130,000 a ton in the March quarter.
The prices of the two main inputs for steel production — iron ore and coal — have risen as Russia’s invasion of Ukraine exacerbated supply shortages. Australian coking coal has jumped 45% so far this year, while iron ore prices in Singapore are up around 27%. More than 40% of the steel from the two companies is destined for export with carmakers the biggest customers.
"It’s hard to predict what demand for steel will look like in the future, but the supply-demand balance isn’t bad globally for now,” said Takeshi Irisawa, an analyst at Tachibana Securities Co. in Tokyo. That makes it "relatively easier for domestic steelmakers to pass on increased costs,” he said.
Takahiro Mori, Nippon Steel’s executive vice president, said in February that there would be an increase in longer-term contracts with domestic manufacturers in the half year starting April.
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