Nippon Steel Corp. has begun negotiations with large automakers for hiking prices of its sheet products, pleading an inability to make up for higher prices of iron ore, zinc and other materials through its own cost-cutting efforts, Kyodo News reported, citing industry sources.

Other major steelmakers are likely to follow the leading steelmaker's move, resulting in the fourth consecutive annual rise in steel prices, though they will likely run into resistance from automakers, they said.

Nippon Steel also aims to mark up the prices of sheet and other products sold as construction supplies or electrical appliance parts, likely causing consumer prices to climb as well, the sources added.

In mid-May, major Japanese steelmakers agreed with overseas iron ore suppliers to a 19% increase in wholesale prices for procurement in fiscal 2006. The prices of zinc, which is used to keep steel sheets free of rust, also stand at a record-high level. A resultant rise in materials procurement costs is estimated at Y300 billion for the whole steel industry in fiscal 2006, Kyodo reported.

Meanwhile, steelmakers turned in strong earnings performances in the year ended this March with Nippon Steel and JFE Holdings Inc. registering record group profits.

Corporate steel users therefore are expected to protest the planned price rises, arguing that steelmakers' high earnings prevent justification of passing on higher materials costs to customers, the sources said.