Nippon Steel: Biggest challenge is iron ore supply

The concentration of iron ore supply among a handful of miners is the biggest issue that faces Japanese steelmaker Tokyo-based Nippon Steel Corp., though the company is also concerned by governments levying resource taxes in order to cash in on booming demand for commodities in North Asia, Nippon Steel chairman Akio Mimura said on July 11.
 
Mr. Mimura said costs such as those for iron ore and coking coal - critical ingredients in the production of steel - now account for 85 percent of the total costs of Nippon Steel, up sharply on a decade ago. "If we seek to increase prices of products, we will meet strong opposition from our customers," Mimura told the Boao Energy, Resources & Development Conference in Perth, Australia.
 
Japanese steelmakers have had their profit margins squeezed by miners including Australia-based BHP Billiton moving away from annual negotiations to pricing iron ore on a quarterly or spot basis. This shift has exposed the steelmakers to volatility in commodity prices, Mr. Mimura said, especially as demand for iron ore and coking coal continues to rise sharply in North Asia, driven by rapid industrialization in China and India.