5:00AM New York, 7:00PM Tokyo – Steelmakers are expected to charge 25% to 30% more to automakers in the latest negotiations as they pass on higher coal and iron ore prices to customers.

Stocks in Japan rose after crude oil price rise lifted metals and mining trading companies and expectations of sharp hike in contract steep prices charged from Nippon Steel to Toyota and Mitsubishi Heavy Industries.

Market sentiment

In Tokyo trading Nikkei 225 rose 0.35% or 50.13 at 14,269.61, and the broader Topix Index gained 0.6% or 8.38 to 1,404.25.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 999 billion yen were traded and in the second section 281 million shares worth 6.3 billion yen changed hands.

Of the Nikkei 225 stocks 133 gained, 82 declined, and 10 were unchanged. Nippon Steel led advancers in the index shares with a rise of 6.40% on news the company will hike contract steel prices for both Toyota and Mitsubishi Heavy Industries.

Nippon Steel Corp to increase prices to a record high

Bloomberg news reported today that Nippon Steel will increase contract steel prices to a record for Toyota Motor Corp. and Mitsubishi Heavy Industries Ltd by between 25,000 yen and 30,000 yen a metric ton.

Nippon Steel reported recently that average product prices charged in the latest quarter ended to customers was 80,200 yen.

However, Mitsubishi Heavy said today through Daiya PR it has not agreed price increases for steel plates, but Toyota president Katsuaki Watanabe told reporters at a factory in Central Japan’s Toyota City that the company is “close to reaching a final agreement on a price increase”.

Separately, Kyodo news reported on Saturday that Toyota Motor Corp. and Nippon Steel Corp. have reached a final agreement to hike the price of steel sheets for vehicles by 30% per ton.

After the recent expected price increase of at least 25,000 yen, steel prices are expected to reach record 100,000 yen-per-ton for all shipments beginning April 1st of this year. Japanese steelmakers forecast a threefold gain in coal prices and a 65% increase in iron ore prices in fiscal 2008, which began April 1.

Gainers & Losers

Nippon Steel led advancers in the Nikkei 225 index shares with a rise of 6.40% followed by rises in Nippon Meat Pack of 5.86%, in Sumitomo Heavy Industries of 5.34%, in Inpex Holdings of 5.36%, and GS Yuasa Corp. of 5%.

Nippon Steel gained on news that the company will increase contract steel prices for Toyota and Mitsubishi Heavy Industries by between 25,000 yen and 30,000 yen per metric ton. Nikko Citigroup Ltd. also raised its price target for the steelmakers shares from 800 yen to 900 yen and upgraded its stock to ``buy.''''

Other steel makers rose as well. Kobe Steel Ltd increased 4.56% and JFE Holdings advanced 3.32%.

Inpex Holdings rose after crude oil prices climbed to a record $127.82 on May 16 after the dollar slipped and Goldman Sachs Group Inc. raised its price forecast on continued supply bottlenecks.

Mitsubishi Corp increased 4.85% and Mitsui & Co edged up 3.63% on the news.

Shipping lines also increased after Woori Investment & Securities Co. said in a report “shipyards will continue to show high profitability in the second quarter and beyond''. Hitachi Zosen gained 3.03% and Mitsui Engineering and Shipbuilding climbed 3.19%.

Shinko Securities led decliners in the Nikkei 225 index shares with a drop of 4.21% followed by losses in Shinsei Bank Ltd of 3.82%, in Nippon Light Metal of 3.65%, in Nippon Suisan of 3.59%, and Resona Holdings of 3.11%.

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