July 23 (Bloomberg) -- Nippon Steel & Sumitomo Metal Corp. surged in Tokyo trading after a newspaper report said the company agreed with Toyota Motor Corp. to raise steel prices.
Nippon Steel, the world’s second-biggest steelmaker, rose 3.3 percent to 309 yen in Tokyo, its highest since Feb. 8, 2011. The 32-member Topix Iron and Steel index rose 2.8 percent while the broader Topix index gained 0.5 percent.
The Tokyo-based steelmaker reached agreement with Toyota to raise prices by 10,000 yen ($100) per ton, or 10 percent, for the first half of the year to March 2014, the Nikkei reported today, without saying where it obtained the information. The increase is the first in two years, the report said.
Higher raw material costs and the weaker yen’s benefit to Nippon Steel’s automaking customers is behind the price increase, Shinya Yamada, an analyst at Credit Suisse Securities Japan Ltd., said.
“The reported increase is higher than many market players anticipated,” said Yamada, who rates Nippon Steel outperform.
Tsuyoshi Yoshizumi, a spokesman for Nippon Steel, declined to confirm the Nikkei report. Kayo Doi, a Tokyo-based spokeswoman for Toyota, also declined to comment, saying the automaker doesn’t disclose individual procurement details.
Other steelmakers advanced following the Nikkei report.
JFE Holdings Inc., Japan’s second-biggest steelmaker, rose 3.4 percent to 2,621 yen on the Tokyo Stock Exchange. Kobe Steel Ltd. climbed 2 percent to 155 yen in Tokyo.
To contact the reporter on this story: Masumi Suga in Tokyo at firstname.lastname@example.org
To contact the editor responsible for this story: Jason Rogers at email@example.com