Japanese steelmakers as a whole will face a yearly cost increase of 100 billion yen or more if crude oil prices remain high for a year, an industry leader said Tuesday.
Maritime transport of raw materials from abroad and electricity bills will lead the projected cost increase, Akio Mimura, chairman of the Japan Iron and Steel Federation, told reporters.
Oil prices are surging due to global supply concerns in the wake of Hurricane Katrina. The Japanese steel industry has so far maintained that the adverse effect of higher crude oil prices is limited as domestic steelmakers have reduced their reliance on oil for manufacturing operations.
But “we won’t be able to say so any more” in the face of soaring crude oil prices, Mimura said.
In the business year that ended in March, Nippon Steel Corp. and three other top Japanese steelmakers posted record pretax profits on a consolidated basis for a total of more than 1.1 trillion yen by offsetting the cost-boosting effect of crude oil prices with brisk exports to China and other markets.
The steel industry chief’s comment came as the first batch of U.S.-bound gasoline exports was shipped from Sendai port Tuesday to help ease a shortage of oil products caused by the hurricane.
The shipment of 25,000 kiloliters, or about 160,000 barrels, of gasoline from four Japanese oil refiners — Nippon Oil, Idemitsu Kosan, Cosmo Oil and Japan Energy — are expected to arrive in the U.S. in early October.
On Friday, Showa Shell Sekiyu K.K., a unit of Royal Dutch/Shell Group, separately loaded about 26,000 kiloliters of gasoline onto the same tanker at Yokkaichi port in Mie Prefecture.
Before the 44,400-ton tanker Maritime Vanessa left the port Tuesday evening, the refiners held a news conference in Sendai.
“We are ready to cooperate further if necessary, after ensuring stable oil supply for the domestic market,” Nippon Oil President Shinji Nishio said.
It is rare for Japanese distributors to export gasoline to the U.S. The move came in response to the government’s call for emergency help after Katrina ravaged U.S. Gulf Coast oil installations.
Economy, Trade and Industry Minister Shoichi Nakagawa indicated at a news conference in Tokyo earlier Tuesday that the export of petroleum products by Japan, which imports almost all of its oil, is a meaningful contribution to the global market.
“Thanks to the private-sector stockpile, we can export petroleum products. I am full of emotion as Japan can contribute to the world with its oil,” Nakagawa said.
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