Japan: Toyota keeps steel prices stable in first half of FY'24

Toyota Motor Corporation, has opted to maintain current steel product prices for all types, including thin sheets, throughout the first half of the fiscal year 2024 (starting April 2024). The company has begun informing its customers of this decision. This marked the third consecutive quarter with unchanged prices for steel products.

The price automakers pay for steel materials, also called the "collection price" or "centralised purchasing price," is used for both supplier agreements and parts valuation. Toyota's current estimated price for hot-rolled steel sheets is JPY 156,500/t ($1,041/t), which will remain unchanged from April onwards.

Moreover, Toyota and Japan steel have already finalised steel price agreements for the first half of FY24. This follows a shift by Japan steel to a new "pre-determined method" where they agree on both price and quantity upfront with customers across various industries. While specific details are not disclosed due to individual negotiations, it appears the price negotiations resulted in a price increase.

Japan Steel, citing rising costs for both market raw materials and logistics, requested a price hike for their main raw material during the target period. Negotiations were subsequently initiated to discuss this proposed increase.

Toyota has raised the price of steel by JPY 40,000/t ($266/t) in the second half of FY22. This brings the cumulative price increase to JPY 80,000/t ($532/t) over the past three quarters. Also, the price of steel used for calculating parts appraisal is higher than the market price due to considerations for parts manufacturers. Due to which the impact on parts makers may be higher than the headline price increase suggests.

Moreover, payment price has remained unchanged for the first and second half of FY23, and continues to show no connection to the market price. This has led to speculation that the company may be intentionally avoiding drawing attention to price fluctuations. As a result, a growing sentiment suggests that the payment price is merely a formality and has lost its significance.

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and BigMint