Toyota Agrees to 30% Steel Price Hikes

Nippon Steel and other big Japanese steelmakers have reached broad agreement with Toyota Motor to raise steel prices by more than 30 percent, the Asahi Shimbun daily reported on Thursday, boosting the price of steel firms' shares.

Auto assembly line

Shares in Nippon Steel, the world's second-largest steelmaker, rose 6.0 percent, and third-biggest JFE Holdings climbed 4.8 percent by the end of morning trade in Tokyo. Sumitomo Metal Industries was up 6.3 percent.

The steel sector subindex rose 4.8 percent, the biggest percentage gainer among sectors.

The Asahi Shimbun reported that Toyota has agreed to a price increase of above 25,000 yen ($238) per ton for sheet steel this business year to allow steelmakers to pass on most of the recent cost increase.

Nippon Steel and Toyota both declined to comment on the report.

Nippon Steel has said recent spikes in iron ore, coal freight and other prices would cost the company 1 trillion yen ($9.52 billion) more this business year, equating to a 38 percent cost increase, or 30,000 yen per ton.

The increases above 25,000 yen would push steel prices up over 100,000 yen a ton for the first time, topping a previous high of 99,000 yen in 1982/83, the paper said.

A spokeswoman at Nissan Motor confirmed comments made by Chief Executive Carlos Ghosn to several local newspapers that a partial shift of the price hikes to consumers would be inevitable under current conditions.

Ghosn said, however, that Japan's No.3 automaker would not raise product prices ahead of industry leaders such as Toyota, the spokeswoman said.

Copyright 2008 Reuters. Click for restrictions.