Japanese steelmakers negatively impacted by rising costs

Nippon Steel, Japan's largest steelmaker, stated that steelmakers may face further price increases this year due to the decline in demand due to rising commodity prices.

Nippon Steel Corp. Vice President Takahiro Mori said in an interview that the company has secured contract price increases through negotiations with local customers in the second half of the fiscal year through March.

Mori said the increase in raw material cost is "completely different" from the assumptions Nippon Steel made earlier this year. Some of the additional costs incurred by the company in the first six months of the fiscal year "will be reflected in product prices from October," he said.

The price of iron ore, the main cost of steelmaking, rose 32 percent in the three months to March, but has now reversed that rise amid the weakness in the Chinese steel industry. Meanwhile, the yen is down about 18% against the dollar this year.

Nippon Steel has already benefited greatly from customers negotiating prices on a short-term basis. Mori said the price per tonne increased by at least $286 from July to September.

Source: Bloomberg