Toyota Motor Corp is in the final stages of talks with Nippon Steel Corp on steel sheet prices and may accept a 25 percent increase for the April-September period, the Nikkei business daily reported.
A 25 percent price hike would add an estimated 20,000 yen to the steel cost per vehicle, the Nikkei said.
The proposed price hike would result in a cost increase of about 600 billion yen ($6.5 billion) for the six months for manufacturers, builders and other domestic industries, the paper said.
"It's tough for both steelmakers and automakers, but when automakers' earnings are recovering this may have been unavoidable," Advanced Research Japan senior analyst Koji Endo said.
"What Toyota will do from here is rationalise production and absorb the costs, and maybe raise retail prices, though it's not easy to do that."
He added that Toyota may try to hike prices in markets such as China, the Middle East and Southeast Asia where demand is strong, as well as in the United States, where demand has started to pick up.
A Nippon Steel spokesman declined to comment. A Toyota spokeswoman said no decision has been made and declined to comment on negotiations.
The steep rise from the previous financial year would put the price of cold-rolled steel sheet around 100,000 yen a tonne, with zinc-coated steel sheet priced even higher, the paper said.
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