Nippon Steel and Toyota Motor have agreed to reduce steel product prices for the October to March period by JPY5,000 (US$64.80) a ton compared with the previous fiscal half year, sources told Kyodo News.

While the rate of the price cut varies depending on the type of steel product, the prices of products for automobile manufacturing will be around 5% lower than they were in the April to September period.

The prices were raised by about JPY13,000 ($168.50) per ton for the first half of fiscal 2011 due to rises in the cost of raw materials such as iron ore but Toyota had asked for price reductions for the second half of the fiscal half, which ends March 2011, as raw material costs dwindled amid the global economic slump, the sources said.

Although steelmakers protested against large price cuts as they are struggling with export operations due to competition from Chinese and South Korean rivals, Nippon Steel eventually agreed to reduce the prices, the sources said.

The move is expected to ease the burden on Japanese automakers, which have been suffering from the effects of the strong yen that eats into overseas profits of export-related companies when repatriated, Kyodo News noted.