July 24, 2008

Japanese auto majors urge changes in steel price talks

Mr Fujio Cho chairman of Japan Automobile Manufacturer Association have urged changes in negotiations with steelmakers for prices of steel sheets used for cars which are traditionally decided once a year in spring by Automobile manufacturers and steelmakers.

Mr Cho said this negotiation style is not suitable in the changed market environment. He said that "This year, we will continue to have the once a year negotiation with steelmakers and we don't have any proposal for an alternative price talk scheme.”

Mr Cho said that "The previous economic principles based on supply and demand are not working. Fund money going into the market, a few suppliers having monopolistic control over iron ore prices are moving based on a different set of dynamic.”

He said that he does not see steelmakers as negotiators on the other side of the table, but partners. He said that "There is no simple solution. In that sense, steelmakers should not be seen as negotiators on the other side. Steelmakers and automakers are on the same boat. We should talk issues together.”

He, however, added that he would like to suggest to Toyota Motor to change its way of procuring materials.