Aug 23 2013

By the second half of this year, Toyota Motor Corp. is likely to increase the steel prices for its suppliers by 12%. People, who asked not to be named, told that, on Wednesday the biggest automaker notified its supplier about the rise of hot-rolled steel iron by $81 (8000yen) to $757 (74,500 yen) in October – March period from April – September.

Toyota’s spokesman in Tokyo, Ryo Sakai, gave no comments on the price hike. Toyota helps the suppliers cut costs and decrease the risk of currency swing by buying steel in bulk and reselling it to the suppliers. Takeshi Irisawa, a Tokyo based analyst, said that small steelmakers in Japan usually use steel prices of Toyota as a reference for negotiation with other buyers in auto industry. It is indicated from the price increase that Japanese exporters and suppliers are sharing some gain from yen which became weaker in result of Prime Minister’s economic policy.

On the other hand, steel producers are struggling with the high import cost of raw materials. In July, Nikkei reported from an unnamed source that, for the first time in two years, Nippon Steel, Sumitomo Metal Corp and Toyota reached an agreement to increase the prices by 10,000 yen per ton. At that time two companies declined to give any comment.