Toyota Motor Corp. has agreed with major steel makers to lower the price for steel sheet from April to September, the first price cut in 18 months, sources close to the talks said.
Toyota and steel makers including Nippon Steel & Sumitomo Metal Corp. reached the agreement because the price of coal, which is used to fuel the sheet-making process, has come down since peaking late last year.
The auto giant’s negotiations Wednesday are seen as a bellwether for wider price moves. The price cut is expected to help automakers and other manufacturers that use steel sheet, including shipbuilders and electronics makers, to cut materials costs and create headwinds for steel makers’ earnings.
Steel makers have apparently agreed to reduce the price charged to Toyota’s parts suppliers by several thousand yen per ton from the previous six months, despite their initial reluctance stemming from rising capital investment costs, the sources said.
Prices are renegotiated every six months and retroactively applied to the relevant period. In the preceding half-year period, Toyota agreed to the first price hike in 3½ years when coal prices climbed due to a production cut in China.