Nippon Steel price rise could be a turning point

Nippon Steel & Sumitomo Metal will raise prices for steel sheet used to make building materials and car parts by about 20 percent, the company said. This is the company's first jump in prices in nearly three years.

Prices will increase starting in June for the three main types of steel sheets - hot rolled, cold rolled and coated - which are sold to distributors and metalworking companies.

The Japanese steel industry will face higher costs for iron ore and other raw materials, amid growing speculation that the Asian market has bottomed out. Chinese metallurgists have cut blast furnace production and raised prices since the beginning of the year, pushing steel prices higher in Asia. With the slowdown in the inflow of cheap steel, the demand for products exported by Japanese steelmakers is growing.

"Shipments to automakers will recover in July or later, and demand for use in construction associated with the Tokyo Olympics will also grow," said a Nippon Steel sales staff member.

Iron ore prices have risen more than 50% from the end of last year to $ 60 per tonne. The price that Nippon Steel pays for the July-September contract is likely to increase.

Steel prices in Japan have continued to decline, so Nippon Steel's price hike could be a turning point if it spreads across the industry. The steelmaker is likely to push for higher prices in negotiations with large clients such as automakers and electronics manufacturers.
But a Steel Trading House official said the price increases will take time to spread because demand for sheet is still sluggish.
Nippon Steel's pre-tax profit fell more than 50% for the year ended March 31. Improvement in incomes will depend on whether prices rise.