Foreign Steelmakers Say Prices to Rise, Contrasting U.S. Firms

Foreign steel executives, meeting at a global summit in Rome, say they expect higher prices to continue into next year, just as their U.S. counterparts are seeing prices recede, the Wall Street Journal reported.

The reason for the divergence: capacity. In the U.S., new capacity is coming on line, which is damping prices, while capacity abroad remains relatively stable.

Hot-rolled steel in the U.S. is down $40 a ton from a month ago to $350 a ton. Yet, even with that decline, prices in the U.S. are still higher than abroad.

Across Europe, Asia and Latin America, chief executive officers, chairmen and presidents of the biggest steelmakers say that a soft world economy hasn't yet stunted demand for their steel in their home countries or abroad, excluding the U.S.

The top executives have gathered here as part of the International Iron and Steel Institute's annual meeting to discuss the state of the steel industry.

"It's too early to talk about a specific percentage for the price increase," said Joseph J. Kinsch, chairman of Europe's Arcelor, the Luxembourg-based company that is the world's largest steel company. "But we are confident about an increase for the first quarter of next year."

Arcelor increased the price of its hot-rolled steel, a basic product used to make a variety of steel used in construction, machinery and automobiles, by 7 percent in the current quarter.

Akira Chihaya, president of Japan's Nippon Steel Corp., said customers in Japan should be prepared to continue to pay higher prices. "It depends on the economic situation, but I feel prices will grow well into next year. The demand is there," he said.

One factor affecting demand and price in Japan is the pending March 2003 merger of NKK Corp. and Kawasaki Steel Corp., which will result in a new combined company called JFE Steel Corp. that will become Japan's second-largest steelmaker after Nippon. Customers are stockpiling now because they will lose the ability to pit NKK against Kawasaki to obtain better prices.

In South America, steel executives say a combination of import controls and limited competition has allowed the price of hot-rolled steel to increase 3 percent-4 percent in the third quarter of 2002, compared with the second quarter.