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. 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.
Tata Steel should be able to convince customers for three-month contracts, if big players like ArcelorMittal go for quarterly pricing as well. If successful, the company’s European unit Corus will gain the most as it depends on outside sources for its raw material requirements.
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