Toyota seen hiking wholesale steel prices for parts makers
Japanese automaker seeks to defray rising costs for coal and iron ore
TOKYO -- Pressed by steeper procurement costs, Toyota Motor is expected to significantly raise wholesale steel prices for component makers for the April-September fiscal first half, in a move with implications for manufacturers beyond the autoparts industry.
The Japanese carmaker will likely hike prices by some 14,000 yen ($124) per ton from the previous six-month period, marking its first such increase in three-and-a-half years.
Toyota negotiates a price for steel stock with Nippon Steel & Sumitomo Metal every six months, buying large quantities at this price and then reselling the stock to parts makers. The wholesale price Toyota sets for April-September will reflect the price it pays Nippon Steel for the October-March half.
During that period, the price of coal -- a key fuel for steelmaking -- has been rising steeply. Iron ore prices have also jumped, with demand outpacing supply. Toyota thus had to pay Nippon Steel much more for materials, forcing it to raise wholesale prices in order to defray the cost.
The expected price increase could be a body blow to Toyota's network of suppliers. Even businesses in other steel-dependent industries, such as appliance manufacturers and shipbuilders, would need to cut costs in order to protect their earnings.