Hyundai Steel has reached an agreement with Hyundai Motor and Kia Motors, the country’s top two automotive companies, to raise the price of steel plates, which is widely expected to increase the steelmaker’s annual sales, an industry report said Thursday.

The price of automotive steel sheets supplied by the country’s No. 2 steelmaker to the two car companies will be hiked 60,000 won ($53.40) per ton, according to local news and analyst reports.

A spokesperson of Hyundai Steel said it was difficult to confirm the exact amount of the hike but that it was safe to expect an adjustment near the figure.

If the hike is applied from May, it is expected to boost the steelmaker’s annual sales and operating profit by some 200 billion won this year, according to Lee Jong-hyung, an analyst at Daishin Securities.

“Some in the market had doubted the possibility of a price hike. The latest agreement has clarified market uncertainty,” Lee said.

The uncertainty surrounding an increase of Hyundai Steel’s steel plate price had continued due to the steelmaker’s high reliance on Hyundai and Kia Motors.

Among the 4.5 million tons of automotive steel sheets the local steelmaker produced last year, some 4 million tons were supplied to the two auto companies, the company said.

Sales of Hyundai Motor and Kia Motors have been dealt a blow due to sluggish sales in China and the US, largely due to the installment of the Terminal High Altitude Area Defense system here and aging models, which had led some in the market to doubt that the two would agree to a price hike.

Lee expected the latest deal to last until the end of this year, as Hyundai and Kia Motors had retained an adjusted steel plate price for at least six months in the past.

Meanwhile, Posco, South Korea’s leading steelmaker, had agreed with key automakers -- Renault Samsung Motors, GM Korea and SsangYong Motor-- to increase the steel plate price by some 10 percent earlier this year.

The leading steelmaker has strategically diversified its customer base to bolster automotive steel plate sales.

The portion of steel sheets supplied to Hyundai Motor reached less than 10 percent last year, the company said. 

By Kim Bo-gyung (lisakim425@heralcorp.com)