Nippon set to demand steel cost increases

NIPPON Steel Corp, the world's second-biggest maker of the metal, is asking for a 10-percent rise in plate steel prices from Japanese ship builders to offset material costs, according to three insiders.

An increase to as much as 110,000 yen (US$1,071) a metric ton would be effective from October 1 under contracts with domestic ship builders and machinery makers, the people, who asked not to be identified, told Bloomberg News.

The firm raised prices by 40 percent to a record in the first half ended September 30.

Nippon Steel, which forecasts a 28-percent drop in annual profit, needs to raise prices to offset a tripling of costs for coking coal and a surge of as much as 97 percent in iron ore.

A price increase would narrow the difference with South Korean ship yards, which are paying more than Japanese customers such as Mitsubishi Heavy Industries Ltd.

President Shoji Muneoka in July said soaring material prices would add 35,000 yen a ton to costs this year. Nippon Steel would ask customers to pay more for the metal after it agreed to a fourfold increase in semi-soft coking coal prices retroactive to April 1, he said.

Operating margins at the steel maker sank to a four-year low of 10 percent in the three months ended June 30.

Nippon Steel has raised spot prices for domestic wholesalers by about 50 percent since the quarter ended March, when the company said its average product price was 80,200 yen a ton.

The company raised plate prices for South Korean yards including Hyundai Heavy Industries Co by as much as50 percent to a record 150,000 yen a metric ton.