Steel manufacturer’s competitive response to falling steel prices

An article in the Wall Street Journal (April 27, 2013) describes the decline in steel prices and the response by steel manufacturers. ThyssenKrupp is claimed to offer to pay freight costs to maintain market share. Further price discounts of 5 to 8 % are reported, including waiver of fees for higher grade products. Other steps include buyouts of capacity and its elimination to better match supply to demand. But customers of such steel claim that they face contract prices for steel, signed last year, and thus will not benefit. Given the glut of steel capacity, will the rush to maintain share further worsen steel industry woes? Once buyers shift transport costs to suppliers, can third party logistics providers enable efficiency in shipments ? Will this shift in responsibility for transport have to be accompanied by vendor managed inventory contracts to enable overall cost reduction ?

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About aviyer2010

Professor
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