The world's biggest automaker Toyota Motor Corp. (Toyota) plans to ask Nippon Steel Corp., the world's second largest steelmaker, and other steelmaking companies for a 30 percent price cut in auto sheet prices given the slowdown in the steel and vehicle markets.
Toyota is generally expected to agree with Nippon steel on a benchmark price for 2009. The Japanese car producer is reported to be planning to negotiate for a price reduction to JPY 70,000/mt ($700/mt) from JPY 100,000/mt ($1000/mt). Such a reduction would bring prices down to 2005 levels. Nippon Steel supplies roughly JPY 1 trillion of steel per year to Toyota.
Steelmakers had previously been raising prices due to strong demand, driven by China and other prominent economies. However, demand has recently seen a significant scaling down with the impact of the global economic crisis on car sales. Moreover, Toyota expects its 2009 sales to decline by at least one million vehicles, and intends to cut costs as the financial crisis threatens the automotive industry.
If the reduction in question is agreed, it would indicate the first decrease in the auto steel sheet price for seven years.