Japan’s top steelmaker said it’s close to securing price hikes from domestic manufacturing giants, signaling the balance of power is shifting from buyers to sellers as the alloy’s price surges.
“We’ve seen big progress in correcting contract prices,” Nippon Steel Corp. Executive Vice President Takahiro Mori said Friday in an interview. “Second-half contracts have been almost settled.”
Japan’s steel suppliers are gaining the upper hand in a market where carmakers, their biggest customers, have typically had more bargaining power. Senior executives of the steelmaker have been increasingly vocal in seeking better terms for domestic contract prices to bridge the gap with international prices. Back in May, the president warned the company can’t take responsibility for stable supply unless unreasonably low domestic prices are corrected.
Mori said domestic steel users have broadly accepted calls by the company to raise contract prices to reflect cost surges. Nippon’s average price for its products sold both overseas and at home rose to the highest since at least 2008 in the three months through September amid tight supply and robust demand.
The steelmaker is also trying to bring more changes in the way contracts are implemented, as part of its push to amend traditional business practices in Japan. It’s seeking to conclude talks before it begins delivery, shorten the contract terms to three months from six now and deliver products only after agreeing on prices, he said. Talks with buyers for the second-half for the year ending March typically end around February, although delivery starts before that.
The executive declined to elaborate on the details, including naming the customers or the size of the price hikes, saying the negotiations are private. Talks between Nippon Steel and Toyota Motor Corp. are held twice a year and are closely watched as they typically serve as a benchmark.
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