Toyota Motor Corp. has decided to raise steel prices for the first half of FY’22 from April this year by JPY 20,000 per tonne (t) ($173/t) compared to the second half of FY’21, according to sources in the Chubu region.
The company had revised the prices of steel sheets in Oct’21 for the first time in two years by JPY 20,000/t. This was the second consecutive half-year price increase of a total of JPY 40,000/t ($346/t).
The supply price, also known as the collective purchasing price, is the price at which automakers supply steel to manufacturers under their centralised purchasing umbrella, and it is also the price used to assess parts.
Toyota’s supply price for hot-rolled steel sheet from Apr’22 is estimated to be about JPY 116,500/t ($1,008/t)
Toyota, Nippon Steel reach price deal for H1FY’22
In addition, Toyota and Nippon Steel appear to have already settled price negotiations for the first half of FY’22 (Apr-Sept). Nippon Steel requested customers in each sector to adopt a ‘pre-determining method‘, wherein the price and quantity of steel are decided before the steel is shipped, and automakers including Toyota are believed to have accepted the request.
The price to be paid by automakers is determined based on the results of the previous half-year price negotiations, taking into account other factors such as the current steel market conditions.
In this case, the price was decided based on the results of the negotiations for the second half of FY’21 (Oct-Mar). Based on the revised price (JPY 20,000/t hike), it is estimated that the price was decided close to that.
The focus will turn to whether companies can absorb these high costs of raw materials by reducing other costs or pass them on through higher product prices in the future.
Note: This insight has been published in accordance with an article exchange agreement between SteelMint and Japan Metal Daily.
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