Tata Steel keen on quarterly price contracts

MUMBAI: Tata Steel, India’s largest producer, is in talks with buyers to replace annual with quarterly price contracts, following similar moves by raw material suppliers. Agreements have yet to be reached as customers will struggle to price their products if steel prices are adjusted every quarter, managing director HM Nerurkar said at the World Economic Forum in Ho Chi Minh city. Steelmakers are adjusting to a shift in the pricing of iron ore and coking coal after Vale, BHP Billiton and rival mining companies abandoned a 40-year tradition of annual prices.

Last month, Lakshmi Mittal, CEO of ArcelorMittal said the company is trying to negotiate quarterly prices with customers. “Tata Steel should be able to convince customers for three-month contracts, if big players like ArcelorMittal go for quarterly pricing as well,” said Nikhil Agarwal, an analyst with Kim Eng Securities India.

“If successful, the company’s European unit Corus will gain the most as it depends on outside sources for its raw material requirements.” “Previously, we spent a lot of time on pricing during the beginning of the year and the rest of the time we would concentrate on product quality and service,” Mr Nerurkar said.