Japan: Toyota to raise steel prices for auto sector after two years

Japanese auto major the Toyota Group announced on 6 Sept'21 that it plans to raise the price of carbon steel and special steel for automobiles by JPY 20,000/t (over $182/t) from Oct'21, according to a report by Japan Metal Daily gleaned by SteelMint.

The increase is the first in two years since the second half of 2019. The market estimates that the price that Toyota would pay for hot-rolled steel sheets after the hike is around JPY 96,500/t ($878).

The Japanese steel industry expects that the increase will be reflected in steel products delivered in H1 FY'22 (Apr-Sept'21), and negotiations for an increase in steel products in H2 (Oct'21-Mar'22) can proceed.

Sources in Japan's steel industry pointed out that the hike has come a little too late and despite the increase prices are relatively cheaper compared to the actual market - over JPY 100,000/t ($910).

Hike long overdue

Sources added, furthermore, that the structure of prioritising the supply of steel for automobiles cannot be maintained forever without taking into account the rise in prices of steelmaking raw materials and subsidiary materials as well as transportation costs amid tight supply and demand.

According to sources, It has been decided that the price would have to be raised for both ordinary as well as special steel by JPY 20,000/t.

The price had been flat for three consecutive quarters until H1 of this year, but it will be the first revision in two years since the price was raised by JPY 4,000/t. At present, the domestic steel market is upbeat, driven by overseas market conditions. Despite the purported increase of JPY 20,000/t, the supply price is still below the market level.

Steel prices likely to rise

The supply price is also called the purchase price, which is the price at which an automobile manufacturer supplies steel materials to manufacturers under centralised purchasing, and is also used for parts assessments. Toyota's supply price from Oct'21 is estimated to be about JPY 96,500/t for hot-rolled steel sheets.