Car makers face higher steel prices: report

June 30, 2008
CAR makers in Europe face price rises of up to 60 per cent for steel while US demand was cooling, a top steel maker told a magazine.

German weekly magazine Auto, motor and sport reported over the weekend that European car makers would have to face drastic price increases of up to 60 per cent for steel in coming weeks and months.

According to an advance copy of an interview with a senior manager of ArcelorMittal to be published on Thursday, the steel company planned to increase prices in several steps over the coming weeks and months.

“Contracts with our clients usually run over 12 months, but we’re already now beginning to negotiate with them how we can share the (increased) costs (for steel),” said ArcelorMittal vice-president automotive Jean-Luc Maurange.

Mr Maurange pointed to higher raw material costs, a rise in transportation costs and the unabated demand for steel.

ArcelorMittal planned the increases over the next few months to avoid an even more “drastic” rise in prices in 2009.

Auto, motor and sport said ArcelorMittal delivers some 23 per cent of the steel needed by German carmakers, adding that its market share in Europe was around 50 per cent.

In the United States, Mr Maurange said the company was seeing the first signs that steel demand was cooling due to the crisis of US car makers.

“(For the full year 2008,) I expect revenue to rise slightly, mainly resulting from price increases, while steel sales will stagnate,” Mr Maurange told the weekly magazine.

He said the steel producer expected to grow in the Western European market, but was beginning to feel the weakness in the North American market.

The Asian market won’t be able to deliver on ArcelorMittal’s expectations as the steel maker wasn’t set up well enough in the region, Mr Maurange said.

http://www.theaustralian.news.com.au/story/0,25197,23943984-20142,00.html

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