Some auto makers to fight steel surcharges: report
(Reuters) - Some auto makers are threatening to fight surcharges steelmakers are trying to impose on agreed supply contracts in a bid to curb the impact of spiking steel prices and bolster their weak finances, The Wall Street Journal said, citing people familiar with the matter.
The auto makers are looking to fight the additional charges in court, saying that financial terms of a contract cannot be altered, they told the paper.
It did not say which auto makers planned such action.
Many auto makers, including Ford Motor Co (F.N), General Motors Corp GM.N, Toyota Motor Corp (7203.T) and steel companies like ArcelorMittal (ISPA.AS), United States Steel Corp (X.N) and AK Steel Holding Corp (AKS.N) are currently negotiating deals on price and terms of steel bought on contract.
Both sides agree that the price in the next cycle of negotiated contracts will be significantly higher than in previous contracts, owing to higher costs for raw materials such as iron ore and higher energy prices, the paper said.
Auto companies, reeling from rising fuel and raw material prices, the credit crunch and the housing market downturn, are trying to cut costs and shore up capital levels while steel prices have soared as increased demand from rapidly developing economies like India and China is outstripping supply.
(Reporting by Pratish Narayanan in Bangalore; editing by Rory Channing)
