Toyota (TM) has negotiated a reduction in the price it pays for steel, in a move that could boost its margins and put an end to declining operating profits.
Toyota, which is Japan's biggest buyer of steel, reportedly negotiated its first price reduction in 18 months, sending shares in the country's biggest steel producers down in Tokyo.
Nippon Steel & Sumitomo Metal Corp (NSSMY) shares closed 2.48% down in Tokyo Thursday, changing hands at ¥2,555. JFE Holding Inc. (JFEEF) lost 4.37% in Thursday trading, to close at ¥2,059.
Toyota, who buys steel for its suppliers to cut cost, will cut its steel prices by about ¥5,000 a ton ($46) in the second half of the fiscal year through March, after agreeing prices with Nippon Steel, the Nikkei newspaper reported on Thursday.
This is at odds with the price hike some suppliers were hoping for, after they warned of higher input costs and gains in world markets. Nippon Steel had been hoping for an 8% rise to ¥83,000 for the half year to the end of September.
The price set between Toyota and Nippon Steel usually serve as a benchmark for contracts.
Toyota closed at ¥6,107 on Thursday in Tokyo, after losing 1.07%.
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