May 19 2010 | Andrea Klettner
Toyota is set to raise the cost of steel it sells on to its parts suppliers following a hike in manufacturer’s prices.
The Japanese automotive company, which purchases steel in bulk on behalf its vendors to boost its bargaining power, is expected to increase the price in October, according to reports in Nikkei.
Toyota added that its early announcement would give parts suppliers the chance to re-calculate costs and adjust prices accordingly, so as not to affect their profits.
The move comes after steel manufacturers, including Tata, said they were increasing prices and switching from annual contracts to more volatile quarterly deals for raw material suppliers. Manufacturers were forced to make the move after raw material suppliers, including those of key component iron ore, changed their pricing policies to cash in on rising demand for the metal.
HM Nerurkar, managing director at Tata Steel, said that although automotive supplies were currently on half-yearly contracts, they would be switched to a quarterly system, a report in the Business Standard said.
Tata’s UK subsidiary, Corus, refused to comment on the price increase.