Steelmakers Raise Prices as Oil Surge and Input Costs Squeeze Margins
Global steelmakers are facing mounting cost pressures as rising raw material prices, higher labor expenses, and surging energy costs squeeze profitability. The recent spike in crude oil prices—driven by escalating tensions in the Middle East—has added further strain, prompting major producers to pass on costs through price increases.
Leading Japanese steel producers including JFE Steel, Nippon Steel, and Kobe Steel are raising prices for flat steel products, particularly general-purpose thin sheets widely used in machinery, automotive, and electronics industries.
Raw material costs rise amid weak yen and supply disruptions
According to data from Japan’s Ministry of Finance Japan, the average import price of coking coal—used in iron ore reduction—rose to around ¥24,700 per ton in January, up about 13% from its lowest level in 2025.
The Japanese yen has weakened to around ¥150 per US dollar since late 2025, pushing up import costs. Meanwhile, heavy rainfall in Australia disrupted supply, driving spot prices for coking coal up by roughly 15% in January.
Iron ore prices also remain elevated at approximately ¥15,000 per ton, about 50% higher than pre-pandemic levels, further increasing cost pressure across the industry.
Steelmakers move to pass on rising costs
JFE Steel plans to raise prices for general-purpose thin sheets by around ¥10,000 per ton (5–10%), starting with May shipments, citing a sharp increase in raw material costs in early 2026.
Nippon Steel has introduced a new pricing structure for high value-added stainless steel products and will raise prices for general thin sheets by about 10% for April orders—marking its first increase in nearly two years.
Kobe Steel is also set to increase prices for general-purpose thin sheets used in construction by more than ¥10,000 per ton, effective May shipments, its first hike in roughly four years.
Oil price surge adds pressure to energy and logistics costs
Rising geopolitical tensions in Iran have driven crude oil prices higher and raised concerns over potential disruptions in the Strait of Hormuz—a critical global energy shipping route.
Higher oil prices are expected to push up logistics costs and electricity prices, particularly as liquefied natural gas (LNG) prices often track crude oil trends. This poses additional challenges for electric arc furnace (EAF) operators, which rely heavily on electricity to produce steel from scrap.
Supply chain risks intensify amid global market uncertainty
Industry executives warn that disruptions in the Middle East could also alter global trade flows. If low-priced Chinese steel exports face bottlenecks in the region, excess supply may be redirected to other markets, increasing price volatility.
As structural changes reshape the global economy, steelmakers face growing uncertainty on both the cost and demand sides. Strengthening supply chain risk management is becoming increasingly critical to sustaining profitability.
