Sumitomo Metals Plans to Revise Domestic Pricing of Seamless Pipes

Sumitomo Metal Industries, Ltd. (Sumitomo Metals) has begun negotiations to revise domestic pricing of seamless pipes for all domestic customers.

1.Overview of the revision
(1) Scope
The revision will apply to all domestic customers (spot sales and long-term contracts) of seamless pipes.

(2) Timing
The revision will apply to seamless pipes produced from July 2008 onwards.

(3) Price revision
The revision will be an incremental price increase of 10%.

2.Background of price revision
Sumitomo Metals had implemented a price revision (a 15% increase) of seamless pipes produced in and after April 2008. Since then, the surge in prices of raw materials such as iron ore and coking coal has far exceeded our initial forecasts. Given this situation, we have been striving to further reduce our costs. Nevertheless, as for raw material cost increase of a level at which its impact has become too significant for us to absorb through various operational efforts, we have no alternative but to ask our customers for substantial adjustments to our prices.

3.Market conditions of seamless pipes
In the current fiscal year (ending March 2009), export demand of seamless pipes is expected to remain strong in the energy-related sector. Domestic demand is also likely to remain strong, particularly in the construction machinery, industrial machinery, and plant engineering sectors. Under the circumstances, we are receiving some strong requests from our customers to increase supply of seamless pipes.

4.Other
Sumitomo Metals is also planning to implement additional 10-15% price increases of gas tubes and other welded steel pipes that are produced from July 2008 onwards.