Nippon Steel, which agrees twice a year to prices with Toyota that are considered a benchmark for both the steel and auto industries, had earlier said it wanted to raise prices by ¥5000 per tonne for its main customers.
The surprise price cut is expected to weigh on margins for Japanese steelmakers, which have forecast solid profit growth in the business year through March 2018 because of expected product price hikes, especially with the recent surge in steel-making ingredients such as iron ore.
Chinese iron ore futures rose to their highest level in more than five months on Tuesday as falling stockpiles of the steelmaking raw material at the country's ports reflected strong demand.
The Nikkei business daily reported that Toyota will drop its wholesale steel prices for its parts suppliers by around ¥5000 ($US46) per tonne in the October-to-March period.
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