Daido Steel to Start Ferrous Scrap Surcharge

Daido Steel started study to introduce new pricing mechanism to secure sustainable profitability under higher raw materials cost. The firm already offers ferrous scrap surcharge system effective in and after October to automakers and automotive parts makers. The firm tries to make netting scheme, in which the firm sells steel products with certain margin to users with ferrous scrap supply transaction with Daido Steel. The firm also studies for chrome surcharge mechanism for structural steel products. The firm announced 20,000 yen per tonne hike for July shipment to cover higher raw materials cost after 15,000 yen hike for April shipment. However, the firm decided to make new pricing system for better margin control and stable supply. Special steel makers in Europe and USA already have scrap surcharge system mainly with monthly revision. Daido Steel considers quarterly revising system under the negotiation with the users. The firm, which has already ferrous scrap netting transaction with part of the users, tries to expand the netting transactions. The firm will start chrome surcharge system for structural steel as stainless steel. The firm tries to secure the profitability through companywide effort. The firm already revised the commission system for traders from fixed percentage to fixed amount with cap in April.