Bloomberg reported that Hitachi Construction Machinery Co may need to pay as much as 20% more for steel, the third increase since May 2008.

Mr Michijiro Kikawa CEO of Hitachi Construction said that it received a request from steelmakers for increases of between 10% and 20% from October 2008. He added that it may need to raise prices of its machines by 3% for half year ending March 2009.

Mr Kikawa said that the steel price increase would be the third this fiscal year after raises in May and August 2008 totaled 40% or about JPY 30,000 a tonne. More costs must be cut to achieve a record profit target this fiscal year because the company may not be able to absorb higher steel expenses. He added that "We will go in hard on the negotiations. We will face a tough earnings period unless we take cost reduction measures.''

He maintained the company's profit forecast announced on April 25th 2008 for a 3.6% gain to JPY 58 billion in the year ending March 31st 2009.

Hitachi Construction, which competes with Japan's Komatsu Limited and Caterpillar Inc, has lost 29% in 2008 as compared with a 24% decline in the benchmark Nikkei 225 Stock Average.