Japan's Kobe Steel Ltd. and other steelmaking and plant engineering companies are changing the way they charge clients to better reflect the rising cost of basic materials, the Nikkei reported on Monday, without citing sources.

Kobe Steel, the nation's fourth-largest steelmaker, is hammering out the details of a pricing framework with autoparts suppliers under which a surcharge would be applied every three to six months to reflect the cost of the ferrochrome used in such specialty products as springs and gears, the business daily said.

Kobe previously had not revised prices based on the cost of any given material, but imported South African ferrochrome has more than doubled in the past year and is expected to rise further, it said.

Sanyo Special Steel Co. plans to tie prices to the cost of scrap iron, a key material in its products, the report said.

Plant construction firms such as JGC Corp. and Toyo Engineering Corp. traditionally have set prices when they receive orders. But considering the sharp fluctuations in the cost of steel and fuel, they now aim to finalize the price on orders later, when key components and materials are procured, the Nikkei said. – Thomson Financial