Steel price spike hurts food suppliers

Steel producer ArcelorMittal SA said last month the price of tin plate would go up 68.9% for food products and 78.6% for beverage products from the start of this month.

Pick n Pay CEO Nick Badminton said the price of cans was affecting food products. With canned cheap dog food, for example, the can made up half the price of the entire product.

The retailer had been asked by some of its suppliers to help them in taking the matter up with the Competition Commission, he said.

Nandi Mokoena, head of strategy and stakeholder relations at the commission, said no complaint had been laid yet and the commission had not had any talks with Pick n Pay.

The retailer met 25 of its suppliers in February in a bid to find out where food price increases were coming from and to see whether the increases could be limited.

Several of the suppliers turned the blame on their own suppliers, principally those in the packaging sector.

As a result, Badminton said there might be anticompetitive practices affecting its suppliers.

Badminton said in February there was “quite a bit of discussion” about monopolies.

He said Pick n Pay's suppliers were “facing pressure from their suppliers”, and concerns over the tin and glass industry were raised.

ArcelorMittal, which has previously been fined for excessive pricing, said the price increase was based on a transparent methodology that took into account international prices and the exchange rate.

Sven Lünsche, ArcelorMittal SA's corporate communications manager, said the company had explained this methodology to the Department of Trade and Industry. The increase was because of prices that had rocketed last year, he said.

Lünsche said its customers had been offered the option of a mid-year review in October to cushion the blow, but this had been turned down. However, it had been agreed this year that prices would be reviewed in October and — should the price differ by more than 10% — they would immediately be raised.

Lünsche said the company had moved away from import parity three years ago and now looked at eight countries' prices to determine the price.

Source: Business Day

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