The chief executive of Japan's second-largest steel maker, JFE Steel Corp, said on Sunday he hopes to see lower iron ore and coal prices next year as raw material supplies grow and steel product output drops.
Hajime Bada, CEO of a core unit of JFE Holdings Inc, the world's fourth-largest steel maker, also said the company was maintaining its plan to reduce steel product output by 1 million tonnes for the current fiscal year ending March 31.
"We expect the iron ore price to come down next year," Bada told reporters on the sidelines of the annual International Iron & Steel Institute meeting in Seoul.
"I'm sure that the price for coal will come down due to ample supplies," he said.
The price of both raw materials has surged this year. Iron ore producers, including Brazil's CVRD, sent shock waves through the global steel sector when they announced a price rise of 71.5 percent, while steel makers agreed to pay over $120 a tonne for coking coal during the current fiscal year.
Bada's comments followed last week's remarks from the chief executive of CVRD that tight market conditions were expected to persist, especially with demand from China strong.
Bada said availability of iron ore would grow as miners were increasing output, while steel makers in Japan, the United States and Europe were reducing production.
NO PRICE CUT:
Domestic demand in Japan was expected to stay strong during the second half of the year, Bada said, but JFE was sticking to its plan to cut steel product output in order to maintain prices.
JFE produced about 30 million tonnes of crude steel in 2004.
Bada said JFE was not lowering its steel product prices because the company was still reducing its output. He added export demand for its products was weak.
JFE exports more than 40 percent of its products - a greater proportion than its Japanese rivals - and is more vulnerable to global price changes.
Last month, the world's fifth-ranked steel maker, South Korea's POSCO Co Ltd, said it would cut prices of 11 steel products by 6 percent to 9 percent due to a rise in steel imports from China and high inventory levels.