I. Key Details of the Price Adjustment

1. Implementation Timing & Product Coverage

   The price adjustment was officially announced on January 10 and took effect for the January contract. It covers three major categories: 300-series cold-rolled thin plates, heavy plates and 400-series cold-rolled products. The revised pricing is uniformly applied to both domestic sales and export quotations in Japan.
2. Price Transmission Method

   Nippon Steel adopted a "unified adjustment + hierarchical implementation" model. Both nickel-based 300-series and chromium-based 400-series products saw a uniform price hike of 5,000 yen per ton. Export prices were converted based on the daily exchange rate, with quotations for customers in North America and Southeast Asia increased by approximately 32 US dollars per ton accordingly.
3. Background of the Price Adjustment

   Alloy raw material costs have been rising for three consecutive months. Meanwhile, the depreciation of the Japanese yen has inflated the expenditure on imported raw materials. In December alone, rising costs eroded the company's gross profit margin by about 4.2%. Therefore, this price adjustment is an inevitable measure to transfer cost pressures and maintain profit stability.

II. In-depth Analysis of the Two Core Driving Factors

(1) Skyrocketing LME Nickel Price: Indonesian Quota Cuts as the Trigger

1. Policy Impact

   Indonesia reduced its nickel ore mining quota from 379 million tons to 250 million tons in 2026, a decrease of 34%. In addition, there are expectations of imposing a 1.5%-2% royalty tax on associated cobalt. These policy changes have triggered widespread concerns about a global nickel supply shortage in the market.
2. Price Trend

   Last week, the LME nickel price fluctuated upward. On January 6, it surged by 10.5% to hit 18,800 US dollars per ton, and closed at 17,700 US dollars per ton on January 9, with a weekly increase of about 5.9%. This price rally has driven the price of high-nickel pig iron up to 925-930 yuan per nickel unit.
3. Cost Transmission Effect

   300-series stainless steel contains about 8%-10% nickel. For every 1,000 US dollar increase in the nickel price, the corresponding per-ton production cost rises by about 80-100 US dollars. As Nippon Steel relies heavily on imports for its nickel raw materials, it is highly sensitive to nickel price fluctuations.

(2) Volatile Japanese Yen Exchange Rate: Rising Import Costs

1. Exchange Rate Trend

   Since the start of January, the US dollar to Japanese yen exchange rate has risen from 156.69 to 157.68 (as of January 12), an increase of more than 0.5%. The depreciation of the yen has led to a 3%-5% increase in the costs of imported raw materials such as iron ore, scrap steel and nickel when converted into Japanese yen.
2. Dual Cost Pressure

   The combination of yen depreciation and rising nickel prices has created a "cost resonance" effect. The per-ton raw material cost of stainless steel has increased by approximately 4,800-5,200 Japanese yen compared with December, which is basically consistent with the magnitude of this price adjustment.
3. Policy Constraints

   Market expectations that the Bank of Japan will postpone its interest rate hike until mid-year have been strengthened, and the interest rate differential between the US and Japan has widened. The yen is unlikely to strengthen in the short term, meaning that cost pressures may persist until the second quarter of 2026.

III. Chain Reaction on the Global Market

(1) Restructuring of the Export Market Pattern

1. European Market

   Affected by the EU Carbon Border Adjustment Mechanism (CBAM), the cost of Nippon Steel's stainless steel exports to Europe has already increased. This price hike will further weaken its competitiveness in the European market, and its market share may be squeezed by Chinese and Indian steel enterprises.
2. Southeast Asian Market

   Nippon Steel holds an 18% market share in the local automotive and home appliance sectors in Southeast Asia. The price increase will force downstream end-users to turn to Asian suppliers such as Tsingshan Holding Group and Taiyuan Iron and Steel (Group) Co., Ltd., intensifying price competition in the regional market.
3. North American Market

   The price gap between Nippon Steel's products and those of US steel mills has narrowed to 15-20 US dollars per ton. Some customers have shifted to local procurement, which may lead to an 8%-10% month-on-month decline in Nippon Steel's export volume to North America.

(2) Cost Transmission in the Terminal Industry Chain

(3) Chain Reaction of Industry Pricing

1. Follow-up Price Adjustment Effect

   Japanese steel mills such as JFE Steel and Sumitomo Metal Industries are likely to follow Nippon Steel's lead and announce price adjustments within 1-2 weeks. Overseas steel giants including POSCO of South Korea and Yieh United Steel of Taiwan are also expected to raise their export quotations simultaneously.
2. Regional Price Differentiation

   European stainless steel prices are expected to remain strong due to the impact of the CBAM policy, while price increases in Southeast Asia will be limited by the off-season demand. It is predicted that the global stainless steel price will fluctuate in the short term, and a new round of price increases may occur in March when the demand enters the peak season.

IV. Enterprise Response Strategies and Market Outlook

1. Short-term Strategies

   Nippon Steel will adopt a combination of "price adjustment + long-term contract price locking" to secure about 60% of its raw material procurement volume for Q1 2026. Meanwhile, the company will optimize its product mix by increasing the proportion of high-value-added products such as electrical steel and automotive steel sheets to offset cost pressures.
2. Mid-to-long-term Layout

   Nippon Steel will strengthen joint venture cooperation with Indonesian nickel mining enterprises and accelerate the construction of overseas nickel pig iron production bases to reduce its dependence on imported raw materials. In addition, the company will deepen localized production in Southeast Asia to avoid the risks of exchange rate fluctuations and trade barriers.
3. Market Forecast

   Supported by Indonesia's reduced nickel quotas, the nickel price is expected to remain in the range of 17,000-18,000 US dollars per ton in the short term. The depreciation trend of the Japanese yen is unlikely to reverse, so Nippon Steel may implement another price increase of 3,000-4,000 Japanese yen per ton in Q1 2026. The global stainless steel price will show a "cost-driven" upward trend.

V. Implications for Chinese Stainless Steel Enterprises

1. Export Opportunities

   Nippon Steel's price hike has opened up market space for Chinese enterprises in Southeast Asia and North America. Chinese stainless steel producers can seize market share through "differentiated pricing + fast delivery" strategies, with a focus on expanding the 300-series stainless steel substitution market.
2. Risk Warnings

   The reduction of Indonesian nickel quotas may trigger a sustained rise in the global nickel price. Domestic enterprises need to lock in inventories of raw materials such as nickel pig iron and ferrochrome in advance to avoid the risks of cost fluctuations.
3. Transformation Directions

   Chinese enterprises should accelerate the technological upgrading of high-nickel stainless steel products to enhance product added value. At the same time, they should lay out overseas raw material bases and build an integrated industrial chain covering "resources, smelting and processing" to strengthen their risk resistance capabilities.