November 22, 2008

Auto steel prices to break 26 year record in Japan

Kyodo News reported that the average price of steel for Japanese automakers is expected to top JPY 100,000 per tonne in 2008 which would rewrite the record high for the first time in 26 years.

Industry sources said that Toyota Motor Corp and major steelmakers including Nippon Steel Corp are finalizing an agreement to raise the average price of some JPY 80,000 per tonne by more than JPY 20,000. The record high is JPY 99,000 set in fiscal 1982.

They said that Toyota is the largest customer in the Japanese steel industry. If it accepts the new price, other automakers, shipbuilders and electrical machinery makers will follow suit. Consumers are also expected to feel the increase.

Major Japanese steelmakers expect prices for coal to spike three fold and iron ore to jump 65% in fiscal 2008, which began last month. They are demanding steep product price hikes of about JPY 30,000 per tonne for 2008

Sources said that Toyota has rejected that level but is expected to accept a slightly lower hike to secure supplies amid growing demand in China.