Toyota to cut steel price for suppliers - sources

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Toyota Motor Corp has told its suppliers that it will lower the price of the steel products it sells them by as much as 9% from April 1, four sources with direct knowledge of the talks said on Tuesday.

The move comes before Toyota completes its own price negotiations with top steelmakers such as Nippon Steel Corp for the business year starting in April, marking an unprecedented step that the sources said could be aimed at containing price hikes by steekmakers.

Toyota buys steel on behalf of its suppliers to get a better deal from steelmakers.

Toyota, which sets the benchmark for steel price negotiations at other Japanese automakers, normally tells its suppliers of its selling prices after agreeing prices with steelmakers.

Toyota said it will cut prices of hot-rolled steel by about 9% to 69,500 yen (USD 769.5) a tonne from 76,500 yen, the sources told Reuters on condition of anonymity because the talks are confidential. In turn, Toyota will pay an equal 7 yen/kg less for the components it buys back from suppliers, the sources said.

However, Toyota also told its suppliers that depending on its negotiations with steelmakers, it may readjust its selling prices, the sources said.

A Toyota spokesman said the company could not comment.

Japanese steelmakers are looking to transfer at least part of the Chinese demand-led rise in raw materials prices to end-users in the latest annual negotiations. But automakers are reluctant to pay more for steel in Japan, where demand is sluggish due to slow car sales.

Japan's JFE Holdings Inc, the world's sixth-biggest steelmaker, said last week it had agreed to a price rise of 55% for the April-June supply of hard coking coal from Australian mining giant BHP Billiton Ltd, but will seek an annual contract again when the deal expires in July.