Toyota may accept a 25 percent increase in steel price

Article by Christian Andrei, on August 25, 2010

Talks between Toyota Motor Corp. and Nippon Steel Corp. over steel sheet prices are in the final stages, according to the Nikkei business daily. In relation to this, Toyota may accept a 25% increase for the April-September period that would add about 20,000 yen to the steel cost per vehicle.

Nikkei business daily also said that the proposed price hike would cause the cost to increase about 600 billion yen ($6.5 billion) for manufacturers, builders and other domestic industries in a six-month period.

Advanced Research Japan senior analyst Koji Endo said that the situation is difficult for both steelmakers and automakers, but this couldn't have been avoided if automakers' earnings are recovering.

He said that because of these circumstances, Toyota will "rationalize production and absorb the costs, and maybe raise retail prices."

But he clarified that this isn't easy to accomplish. He said that Toyota might attempt to raise prices in China, the Middle East and Southeast Asia where there is strong demand.

Prices may also be increased in the US, where demand is picking up. Both companies have yet to confirm this report.

The paper also revealed that the sharp increase from the previous financial year would put result to the cold-rolled steel sheet being priced at around 100,000 yen a ton; and zinc-coated steel sheet priced even higher.

Topics: toyota, price

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