Nippon Steel Corp. "We are seeing great progress in regulating contract prices. The second half contracts are almost complete," vice president Takahiro Mori said on Friday.
In Japan, steel suppliers are taking power in a market where automakers, their biggest customers, generally have more bargaining power. The company's senior executives are increasingly raising their voices to provide better conditions for domestic contract prices to bridge the gap with international prices. In May, the company's chairman noted that unless the unreasonably low domestic prices are corrected, the firm cannot take responsibility for stable supply.
Mori said that a significant portion of domestic steel users accepted the steel company's call for contract prices to be raised to reflect the cost increases. Nippon's average price in both overseas and domestic sales rose to its highest level since at least 2008 in the three months ending September, driven by tight supply and strong demand.
Steelmaker Nippon is also seeking to further change the way contracts are enforced, as part of its efforts to change the traditional way of doing business in Japan. Mori noted that as part of these changes, the company wants the negotiations to be terminated before delivery begins, the contract period to be reduced from the current six months to three months, and product delivery to be made only after an agreement on prices. For the second half of the fiscal year ending at the end of March, negotiations with buyers are generally completed around February, but delivery begins before that.
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