Tuesday December 16, 08:22 AM
Toyota to negotiate lower steel prices: report
TOKYO (AFP) - Toyota Motor Corp (Frankfurt: 853510 - news) . plans to negotiate a 30 percent cut in prices with steelmakers as raw materials costs ease in light of the global downturn, a report said Tuesday.
Toyota plans to ask its largest supplier Nippon Steel (Berlin: NPS.BE - news) to lower the price of sheet steel to 70,000 yen (700 dollars) a tonne from its current 100,000 yen a tonne, the Nikkei (news) business daily reported without identifying its sources.
The two industry leaders generally agree on a benchmark price at the beginning of every year. Both companies declined to comment on the outlook of negotiations.
"The negotiations are conducted between our two companies so we don't make public the contents," said a spokesman for Nippon Steel, the world's second largest steelmaker.
Demand for steel is flagging after shooting up more than 30 percent this year as the world economy sinks deeper into the doldrums, prompting companies to cut back on investments and production.
Toyota plans to cut thousands of jobs and has already idled factories around the world as sluggish sales have caused a glut in inventories.
Toyota buys roughly 1 trillion yen of steel from Nippon Steel, according to the Nikkei.
It said slashing prices by 30 percent would save Toyota nearly 300 billion yen a year and bring the price to the same level as in 2005, when a boom in emerging economies sent costs soaring.
The leading Japanese automaker has taken a huge hit from the global downturn, particularly in the US, which remains its largest export market and where its green vehicles have gained popularity.
Japanese media earlier this week reported that Toyota will postpone large capital investments and eliminate executive bonuses due to the worldwide slump in auto sales and the yen's continued appreciation.
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