December 03, 2008

Nippon Steel to seek 40% price hike – Report

Nikkei business daily reported on that Nippon Steel Corp plans to ask automakers and other customers to accept a nearly 40% increase in prices for its mainstay steel products to offset soaring raw materials prices.

The report quoted Mr Shoji Muneoka president of Nippon as saying that “Nippon Steel will have to propose a price hike of JPY 30,000 (USD 290) for the year to March 2009.

Nippon Steel had earlier sought a hike of roughly JPY 20,000 per ton, assuming that high materials prices would result in a JPY 2 trillion increase in costs to the steel industry. But with coal and other materials becoming more expensive, the company now expects the cost increase to come to slightly more than JPY 3 trillion to the steel industry.

The report said that steel users including auto majors, machinery and electronics products are expected to resist such a large price hike. If steel prices go up JPY 30,000 per tonne, cost increases will likely reach JPY 460 billion a year in the auto industry and JPY 200 billion in shipbuilding.

The report added that other major steelmaker's will follow suit.