Rising raw material costs and a jump in commodities prices as the world recovers from the COVID-19 pandemic have significantly raised steel prices for end consumers like carmakers.
In a semiannual contract negotiation, Toyota has agreed to pay significantly higher prices to procure steel from Nippon Steel, according to Japanese media reports. The hike is due to rising costs of raw materials like iron ore, coking coal, making it the biggest uptick in over a decade.
Both companies did not share the exact details of the price hike, but per reports, Toyota will pay at least 20pc over JPY18,000/mt ($164.11/mt), the record price last seen in 2010. The hike in steel rates is also expected to raise car prices. According to estimates, given the average car uses around 0.7mt of steel, if the cost of steel materials increases by JPY20,000/mt the resulting impact on steel materials’ cost will rise around JPY15,000 for every car.
The rise follows the doubling of hot-rolled coil prices to a little below $1,000/mt in East Asia. HRC prices in the US are trending much higher at over $,2000/mt.
($1 = JPY109.66)