Posco first outsider in Toyota supplier group

Posco has become the first non-Japanese steelmaker to enter an exclusive club of suppliers to Toyota Motor, rivaling auto-sheet providers such as Nippon Steel.

The Japanese unit of Korea’s biggest steelmaker was formally accepted into the Kyohokai, group spokesman Nakaji Honda said. The Kyohokai is a 222-member group of Toyota’s closest suppliers. The automaker is supplied by around 40,000 companies in total.

Posco started supplying the Japanese factories of Asia’s No. 1 carmaker in 2009 and its plants in Indonesia and India in 2003.

The weakening won has made Korean products cheaper than Japanese goods, giving Posco an edge over its Japanese rivals weighed down by the rise in the yen. It will now win steady orders from Toyota, which is lifting production in emerging economies, said research analyst Takeshi Miyao.

“Toyota is undergoing a paradigm shift in purchasing by breaking up its existing supply chain as it looks for ways to lower production costs,” Miyao said. “Posco’s entry will have a negative impact on Japanese steelmakers.”

Posco’s sheet shipments to Japanese carmakers will rise after the merger between Nippon Steel and Sumitomo Metal Industries in October .

Bloomberg