Japan: Surge in raw material prices prompts blast furnace manufacturers to seek price hike

Domestic blast furnace manufacturers are facing significant cost increases due to the recent surge in prices of main raw materials and the rise in costs due to the depreciation of the yen. As a result, they are proposing a price increase of JPY 20,000/t for thin sheet steel products.

Surging raw material prices

The current spot price of coking coal, which is the main raw material for blast furnaces, has increased by 40% compared to July-September 2023. This is due to strong demand in India. The prevailing view is that spot prices will remain high in the future.

The spot price of iron ore has also increased by 10-15% compared to July-September 2023. This is due to the depreciation of the Japanese yen, which has made imports more expensive.

Impact on blast furnace manufacturers

The rapid increase in raw material costs is putting a strain on domestic blast furnace manufacturers. They are facing significant cost increase and struggling to pass these costs on to their customers.

Price increase negotiations

Blast furnace manufacturers are proposing a price increase of JPY 20,000/t for thin sheet steel products. They are seeking an understanding of the value of their products, including the continuation of stable supply as domestic string-attached transaction.

Future outlook

Business negotiations for the first half of next fiscal will begin after the beginning of the year, and price increases are expected based on these circumstances. Blast furnace manufacturers are also facing the problem of logistics 2024 as a future issue. They are promoting initiatives such as expanding lots and relaxing departure and arrival conditions, but cost increases are unavoidable.

In addition, blast furnace manufacturers are in the process of promoting a shift to carbon neutrality in the future. This will also lead to higher costs.

Domestic blast furnace manufacturers are facing a number of challenges, including rising raw material costs, logistics problems, and the need to shift to carbon neutrality. These challenges are likely to lead to higher prices for thin sheet steel products in the future.

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.