Steel Strip

Spiegel online, have conducted an interview with Thyssen-Krupp head Ekkehard Schulz, in which he answers questions regarding the impact of price increases upon their customers.

The head of German steelmaker ThyssenKrupp, 66-year-old Ekkehard Schulz, talks about the sharp rise in steel prices, competition from emerging economies like India, China and Russia, and the prospects for German industry in an age of globalization.

SPIEGEL: Mr. Schulz, do you know how unpopular you are currently making yourself in large parts of the German economy, among your customers?

Schulz: Well, I haven’t noticed any personal animosity against me. But it’s clear that our customers aren’t exactly pleased when we are forced to raise steel prices. Small to mid-sized companies are especially hard-hit, but so is the automobile industry. It’s mostly because almost all commodity and energy prices have climbed to levels in the last three years that I have never before experienced in the 36 years I’ve been working in this industry.

SPIEGEL: How long can companies continue to bear such cost increases?

Schulz: The situation is certainly difficult for some businesses, especially with commodity prices rising together in all major markets. German industry is at a relative disadvantage in this respect.

SPIEGEL: ThyssenKrupp isn’t suffering, at any rate. You can simply pass on higher ore prices to your customers. It’s been said that you are taking advantage of your powerful position and refusing to abide by existing agreements. Is that true?

Schulz: Of course we abide by our agreements. Many customers signed a one-year agreement with us with fixed prices for 2008. We say to them: You have two options. You can stick to the current agreement. We’re happy to do that. In that case, however, you can expect to see another significant price increase for 2009. And we cannot guarantee that you’ll receive the amounts you need in 2009, because our quality steel is in short supply. Or you open up the package and negotiate a new term, let’s say from July 1, 2008 to June 30, 2009. This gives both sides security in terms of estimating prices.

Head over to spiegel.de to read the full interview

Technorati Tags: Thyssen-Krupp,Steel prices,steel strip