Nippon Steel Wins 13,000 yen/t Hike from Toyota for 1H F2011

Nippon Steel and Toyota Motor are concluding the domestic sheet steel contract price negotiation for April-September to increase the price by around 13,000 yen per tonne from October 2010-March 2011 period. They will reach final agreement in the week. Nippon Steel already agreed with Nissan Motor for the price hike. Nissan Motor increased the central purchased steel price for parts makers by 10,000 yen in July. Toyota Motor is also expected to increase the material supply price for parts makers.

Japanese integrated steel makers offered around 15,000 yen per tonne of automotive steel price hike for the first half year of fiscal 2011 started April to cover higher cost for raw materials. Japanese automakers resisted the wide hike when they reduce the production level after the major earthquake while they revise domestic operation and material purchase under historical high yen rate.

However, the automakers finally accepted certain steel price hike when they have to increase the production in the second half year to cover production loss earlier the year. The automakers accepted the higher price for stable steel supply and long term cooperation with Japanese steel makers for international competitiveness.

Japanese integrated steel makers’ profitability is still severe even after the price hike. The makers are likely to seek additional price hike for the second half year when raw materials cost could keep historical high level for October-December period.