US Car Manufacturers resist high steel costs
The car manufacturers in the US have started feeling the picnch of steep steel price hike & push back on the price increase saying that they cannot pay any hike on existing agreed contracted prices & terms. This has given an indication to the steel producers that customers will not be able to withstand the steep hike in prices.
Some cauto manufacturers are even contemplating to fight it out legally if the steel suppliers persist or disrup or disagree to supply material on the earlier contracted terms. Arcelor Mittal's US steel corpn & A.K.Steel corp are understood to be negotiating the terms with Toyota, GM & Ford who are the leading customers.
It is well accepted that the price in the new negotiated contracts will be much higher than in previous contracts, owing to higher costs for raw materials such as iron ore and higher energy prices. One of the world's largest miner i.e., BHP Billiton, said it is charging steelmakers an average of 85 percent more for iron ore, a key ingredient in the production of steel, than charged last year.
Arcelor Mittal, has added a surcharge of $250 on each short ton of steel. However, some automakers are still resisting.
"There are some customers who have accepted the surcharges and some who have not," says Aditya Mittal, chief financial officer at Arcelor Mittal. "For those who have not, we are still in negotiations."
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