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Nippon Steel & Sumitomo Metal raises the cost of production

5 June 2016

Nippon Steel & Sumitomo Metal plans to increase the cost of the steel sheet. This refers to products used for the manufacture of building materials and automobile parts. Growth will be about 20%. Over the past three years the cost of the company’s products for the first time shows a jump. The price change will have on the June delivery. It will cover the three basic types of steel sheets. Will increase the cost of sheets hot-rolled, cold-rolled products coated. They are implemented by metal processing companies and distributors.

The Japanese steel industry will have to cope with the increased costs for iron ore. Yes, and the cost of other species will increase, given the growing speculation on the background of the crisis of the Asian market. Chinese manufacturers since the early years reduce the productivity of blast furnaces. The prices for the products rise. Accordingly, increasing the price and Asian steel. Given the slow influx of cheap steel, the increased demand for exported Japanese products. A representative of Nippon Steel said that the recovery in shipments to automakers will be in July. Thus, continued demand for the use of products in the construction sector. One reason is the Olympic games in Tokyo.

Cost of iron ore since the end of 2015 increased by more than 50%. She is 60 USD/ton. Likely to increase and the cost by contract for July-September, which is paid by the company. The price of steel in the country continues to go down. Perhaps it is the increase in the cost of products, Nippon Steel will be the turning point. Importantly, such measures spread throughout the sector. However, the price growth will take time, as the demand for the sheet leaves much to be desired. The company’s profit to the payment of mandatory payments decreased by 50% or more. Improving the financial situation depends on the subsequent price increases.1

Nippon Steel & Sumitomo Metal Corp. plans to sell almost one third of the shares of Posco, Korea. After this project, its share will decline from 5.04% to 3.32%. The cost of the transaction according to preliminary estimates will amount to 275 million USD. Cooperation between companies was established in the 70-ies. In that period, Japanese experts helped to build in South Korea metallurgical production. Mutual acquisition of shares Rose and Nippon Steel occurred in 1998. In 2006, the proportion of shares from the two sides increased. So the company was insured against a possible takeover by ArcelorMittal Corporation. But now the contacts between the companies is not so strong after accusations by Nippon Steel. It was about industrial espionage. Posco was accused of stealing secrets generate high-quality automotive sheet.

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