Toyota Motor Corp has agreed to pay Nippon Steel Corp and other top Japanese steelmakers over 30 percent more for sheet steel, the Asahi Shimbun daily reported, triggering a rally in steel stocks.
Such a price hike, which is in line with brokerages' estimates, would boost the prospects that Nippon Steel, the world's second-biggest steelmaker, will raise its earnings outlook for the current business year.
Japanese steelmakers have been hit by soaring costs of raw materials, with Nippon Steel forecasting a 34 percent drop in pretax profit for the year ending in March 2009.
The Asahi reported on Thursday that Toyota has agreed to a price increase of more than 25,000 yen ($238) per tonne for sheet steel this business year, allowing steelmakers to pass on most of the recent cost increases.
Nippon Steel and Toyota both declined to comment on the report.
For many years the motor manufacturers have insisted upon and largely gained, year on year "cost down" reductions from steel and component manufacturers. How the world is changing!
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