High input costs a serious concern for Japanese mills- JISF

The recent surge in production costs, mainly due to higher raw materials prices, is becoming a major concern for the Japanese steel industry and needs addressing, according to Yoshihisa Kitano, the newly appointed chairman of the Japan Iron & Steel Federation. Addressing industry media last Friday for the first time as JISF chairman, Kitano said the Federation plans to establish a project team to investigate the jump in costs.

Kitano, also president of JFE Steel, the second largest integrated mill in Japan, said higher production costs - especially for metallurgical coal - are becoming a major issue for members and that the organization will investigate why the prices are surging and what can be done.

A JISF official explained that the rise in production costs, not only raw material prices but also other alloy and energy prices, is being caused in part by the ongoing Russia-Ukraine conflict. When the war might end is unknown, and how it might impact the Japanese steel industry is also unclear, but nevertheless, the Japanese steel producers are trying to minimize the impact risks. "But the JISF as an industry group is taking the issue seriously and will investigate the factors and situation closely," he said.

Kitano revealed that at JFE Steel, Russia-origin coal accounted for about 18% of its coal requirement during the year to March 2021, but that the steelmaker was able to source from other countries, so its steel production volume was not impacted by changing the source.

The new chairman also expressed concern that the Japanese government is considering the introduction of a carbon pricing scheme, claiming that the funds for developing advanced technologies would disappear.

Carbon pricing is the measure to impose charges for carbon dioxide emissions as a financial incentive to cut down on the amount of greenhouse gas that emitters produce, Mysteel Global notes.

Meanwhile, the post of JISF chairman is usually for two years, with the presidents of Nippon Steel and JFE Steel, Japan's No.1 and No.2 steel producers respectively, taking turns to serve as chairman or vice chairman. Eiji Hashimoto, president of Nippon Steel, was appointed as JISF vice chairman.

Written by Yoko Manage, yoko.manabe@mysteel.com

This article has been published under the article exchange agreement between Mysteel Global and SteelMint.