Asia's biggest automaker Toyota has announced that from February 2009 it will buy steel from South Korean producer POSCO for its Japan-based auto plants.
Given the strength of the yen against the won, POSCO will gain a competitive edge against the Japanese steelmakers through its supply deal with Toyota, and it will help the carmaker to reduce costs after falling sales had forced the company to close its domestic plants for 11 days and to cut temporary staff.
This supply agreement represents the first time Toyota will use POSCO's steel in the manufacture of its cars in Japan. It has bought steel from POSCO for its Thai and Indonesian plants since 2003.
POSCO, which is a competitor of Japanese steelmakers Nippon Steel Corp. and JFE Holdings Inc., also sells steel to the other big Japanese automakers including Nissan Motor Co. and Mitsubishi Motors Corp.