Daido Steel Revises Price Mechanism and Dealers’ Commission

Daido Steel and the subsidiary, Daido-Special Metals announced on Wednesday they change price mechanism both for base price and nickel linked price for alloy products with higher nickel content. They start the new system as early as April along with the new fixed amount commission for the distributors. They try to improve the profitability and cash flow through the new system. They also consider shorter bill sight for distributors to reduce the 150 days long sight significantly.The alloy products contain more than 30% of nickel. The material cost represents 60-80% of the selling price due to surging nickel price at London Metal Exchange since mid-March 2006. They try to improve the profitability through better base price level. They also start new nickel linked mechanism to reflect 3-month moving average price every month. They try to improve the smooth reflection compared with traditional system, under which they reflect 3-month average nickel cash price to the quarterly fixed price. They started to offer the new fixed amount distributors’ commission under surging selling price compared with traditional fixed rate commission. They try to introduce fixed commission based on LME nickel price around spring of 2006. They will also shorten the averaged 90 days of payment sight with some 150-180 days of long sight significantly for better cash flow.