Has the good news already hit your ear? We just came across something too good to be true. Yes, it is about Toyota and the steel prices. Toyota has already told its suppliers that the company is going to lower the prices of steel products that it sells them. Any guesses how low the prices are going to be? You are not going to believe this. There will be a descent of 9 per cent in steel prices and this news is a cent per cent true.
Very soon Toyota will be having its own price bargains with top steelmakers like Nippon Steel Corp for the next business year starting 1 April, 2010. Toyota has taken the surprising step even before its own negotiations very intelligently. By doing so, it can limit the likely price hikes by steelmakers more easily. Did you think the only reason was that Toyota did not want to be too aggressive on its suppliers? Definitely no.
Toyota plans to re-adjust the selling prices depending on its negotiations with the steelmakers. By purchasing steel on behalf of its suppliers, Toyota gets a better deal. Toyota which sets the benchmark for steel price negotiations at other Japanese automakers, usually tells its suppliers of its selling prices only after agreeing prices with steelmakers.
The company would be cutting prices of hot-rolled steel by about 9 per cent. On the other hand, Toyota too would be paying its suppliers lesser by an equal amount while buying back components from them. All this info has come out from four sources with direct knowledge of Toyota’s talks with its suppliers. Toyota, however, has remained tight-lipped and did not comment.
What about the Japanese steelmakers? They are actually planning to transfer at least a part of the price hike of the demand-led Chinese raw materials to the end users. They plan to do so during the annual negotiations. But in Japan, car sales are very low and so is the demand for raw materials like steel. So, automakers in Japan seem to be a little hesitant in paying more for steel. By letting suppliers know of intentions to cut prices, Toyota must be trying its best to impact negotiations with the steelmakers. Will it succeed? We do not really know.
There is yet another reason behind Toyota’s startling step. The company may want to keep steel prices very low in order to enhance its own competitiveness. It has been rumoured that Toyota has told its suppliers that competitors like Hyundai Motor Co and Volkswagen were closing the price and quality gap.
JFE Holdings Inc from Japan is the world’s sixth largest steelmaker. Last week, this steelmaker had agreed to an increase of 55 per cent in the prices for the April-June supply of hard coking coal from BHP Billiton Ltd, an Australian mining giant. JFE Holdings Inc will, however, seek an annual contract again when the deal expires in July.
Now, the question remains, ‘Who will win’? Will it be Toyota or the steelmakers? Very soon the battle results will be out. Let’s wait until then.
Very soon Toyota will be having its own price bargains with top steelmakers like Nippon Steel Corp for the next business year starting 1 April, 2010. Toyota has taken the surprising step even before its own negotiations very intelligently. By doing so, it can limit the likely price hikes by steelmakers more easily. Did you think the only reason was that Toyota did not want to be too aggressive on its suppliers? Definitely no.
Toyota plans to re-adjust the selling prices depending on its negotiations with the steelmakers. By purchasing steel on behalf of its suppliers, Toyota gets a better deal. Toyota which sets the benchmark for steel price negotiations at other Japanese automakers, usually tells its suppliers of its selling prices only after agreeing prices with steelmakers.
The company would be cutting prices of hot-rolled steel by about 9 per cent. On the other hand, Toyota too would be paying its suppliers lesser by an equal amount while buying back components from them. All this info has come out from four sources with direct knowledge of Toyota’s talks with its suppliers. Toyota, however, has remained tight-lipped and did not comment.
What about the Japanese steelmakers? They are actually planning to transfer at least a part of the price hike of the demand-led Chinese raw materials to the end users. They plan to do so during the annual negotiations. But in Japan, car sales are very low and so is the demand for raw materials like steel. So, automakers in Japan seem to be a little hesitant in paying more for steel. By letting suppliers know of intentions to cut prices, Toyota must be trying its best to impact negotiations with the steelmakers. Will it succeed? We do not really know.
There is yet another reason behind Toyota’s startling step. The company may want to keep steel prices very low in order to enhance its own competitiveness. It has been rumoured that Toyota has told its suppliers that competitors like Hyundai Motor Co and Volkswagen were closing the price and quality gap.
JFE Holdings Inc from Japan is the world’s sixth largest steelmaker. Last week, this steelmaker had agreed to an increase of 55 per cent in the prices for the April-June supply of hard coking coal from BHP Billiton Ltd, an Australian mining giant. JFE Holdings Inc will, however, seek an annual contract again when the deal expires in July.
Now, the question remains, ‘Who will win’? Will it be Toyota or the steelmakers? Very soon the battle results will be out. Let’s wait until then.
