Sumitomo Metals Plans to Revise Domestic Pricing of Seamless Stainless Steel Pipes

Sumitomo Metal Industries, Ltd. (Sumitomo Metals) has begun negotiations to revise domestic pricing of seamless stainless steel pipes for all domestic customers, due to a surge in prices of chrome, an important raw material for these pipes.

1.Overview of the revision
(1) Scope
The revision will apply to seamless stainless steel pipes supplied to all domestic customers (spot sales and long-term contracts) .
(2) Timing
The revision will apply to June 2008 contracts (for delivery in October 2008) onwards.
(3) Price revision
Prices will be raised by 10%.
If prices of chrome continue to rise, Sumitomo Metals will consider an additional price increase.

2. Background of price revision
The surge in prices of chrome has far exceeded our forecasts made at the end of 2007 when the prices were raised last time. Given this situation, we have been striving to further reduce our costs. Nevertheless, as the level of increase in raw material costs is too significant for us to absorb through various operational efforts, we have no alternative but to ask for substantial adjustments to the prices we offer our customers.
Sumitomo Metals has been receiving strong demand from the energy sector (for use in power generation plants, oil refineries, petrochemical plants, and oil fields), and has expanded capacity by 50% to produce 18,000 tons/year of super high-end boiler tubes at Steel Tube Works in Amagasaki in 2007. However, due to the fact that internal and external supply and demand conditions for seamless stainless steel pipes are tight, Sumitomo Metals has decided to ask all domestic customers to accept price increases in order to ensure stable supply.

Reference:
Trend in High-carbon Ferrochrome Prices (based on benchmark price of product loaded in South-Africa, cent/lb*)

Source: Sumitomo Metals' research
* 1lb (one pound) is equal to about 454 grams.