Tokyo Steel to Expand Sales to Manufacturers with Various Schemes

Tokyo Steel Manufacturing tries to expand the business with steel users including automakers, appliances and heavy electric machinery makers. The firm negotiates with users for new schemes including barter transaction of ferrous scrap and steel products.

The barter transaction is to sell steel products including sheet and plate products in exchange for scrap supply from users plants. The transaction has hurdles including volume, price and contract terms to clear but the new scheme could open new transaction route for electric furnace steel makers.

Japanese manufacturing including automakers, appliances and machinery makers have to compete with international rivals in severe cost competition under recession. Tokyo Steel has cost competitiveness under lower scrap market. The firm’s products is estimated to be 30-40% lower than integrated steel makers. The lower price attracts the users’ interests.

Tokyo Steel is cautious for long term fixed price contract with users due to volatility of scrap price. A user offers the barter scheme to Tokyo Steel when the user can improve the profitability by purchasing lower priced material and by heading volatility of scrap price.

Tokyo Steel also talks with users for quarterly flexible price system for annual committed supply volume. The firm tries to expand the direct contract with manufacturers through the various transaction schemes.