Arcelor's planned 20% price increase concerns customers

Arcelor’s planned 20% price increase concerns customers

As SteelOrbis previously reported in August, Arcelor, the world's largest steel company, plans to raise prices on flat products early next year by at least 20% for some of its largest customers, in order to make up for increases in the costs of raw materials such as iron ore and coke. In response to this action, the company is expected to receive major complaints from its customers, who will find it very hard to cope financially with these price hikes. Officials from Paris-based Impress, one of Arcelor's biggest customers have stated that they will try to argue against the hike and negotiate with Arcelor; however due to their weak bargaining position, they accepted that they will most likely have to pay the price increases. The price hikes are expected to take effect at the beginning of 2005 and will be applied to Arcelor customers with long-term contracts of a year or more. The companies that will be affected by these long-term contracts for flat steel, Arcelor's main product type, are said to be responsible for buying approximately one-third of Arcelor's total steel production, which is forecasted to be 43 million tons this year.