Steel and auto companies will enter into tough negotiations later this month over the price of steel sheets, industry officials said Wednesday.
While Nippon Steel Corp. and other steelmakers want to raise steel sheet prices by as much as 20 percent, Toyota Motor Corp. and other carmakers are adamantly opposed to any price hike, the officials said.
Steelmakers want the prices lifted because most suffered losses in 2001 due to a sharp decline in the prices of steel products.
But carmakers, which for the most part are reporting robust earnings, oppose a price hike out of concerns that further cost cuts are needed to better compete in the global market.
"The steel sheet prices have just declined too much," Akira Chihaya, president of Nippon Steel and chairman of the Japan Iron and Steel Federation, said recently.
An official of a top automaker told reporters, "We are not in a situation where price hikes are acceptable, as vehicle prices have continued to drop."
Toyota, which is expected to produce compact cars in China, is trying to pressure steelmakers to not raise prices by indicating that Toyota may procure steel sheets in China.
Given Japan's prolonged economic stagnation, steelmakers may find it hard to lift their prices.
"The best they can do is to have automakers accept no further price cuts," an auto industry analyst said.