Billions of dollars are being invested in China every year and these new ventures need steel for buildings, machinery and raw materials. Most of the scrap steel that was available in the under developed country has already been used and now they are looking to other countries for their scrap steel. This competition for a finite amount of product is driving up the price. “The price run-up is generally blamed on a shortage of scrap steel caused by China’s booming industrial sector. The increases are due to steel distributor surcharges that have ballooned from $20-$60 per ton to $80-$130 pe

Eventually when new contracts are negotiated the effects of the demand for steel will be taken into consideration but until that happens the situation for automotive suppliers is dire. In due course steel prices may drop, due to a decrease in steel demand, creating higher profit margins for the automotive suppliers but there is no guarantee that will occur. Better analysis of burgeoning markets and their affects on the demand of the raw materials and components necessary for doing business would have been useful for the management of automotive supply companies. With the proper information they could have offset some of the costs that are being incurred from this remarkable rise in steel prices.

Many tiers of suppliers are trying to pass on costs to the next level supplier attempting to lessen the affects of huge price jumps in steel. This process is somewhat successful until one petitioned level does not accept these price increases. Delphi has drawn a line in the sand with price increases when the

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