Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and other domestic automakers may pay a combined ¥200 billion more for steel in the next business year, eroding their earnings, analysts say.

Asia's three largest steelmakers agreed to a 65 percent increase in iron ore prices with Cia. Vale do Rio Doce, Tokyo-based JFE Holdings Inc. said in a faxed statement issued Monday.

Higher demand for cars and ships in China and India is pushing up the price of steel. Japanese carmakers rely on Nippon Steel Corp. and JFE Holdings for high-quality metal and are unable to pass on higher costs to consumers because of increased competition.

"Higher prices would be a huge blow to Japanese automakers," said Koji Endo, a senior analyst at Credit Suisse Group in Tokyo. "Their profits will be squeezed in the short term at least."

Nippon Steel, the world's second-biggest steelmaker, is seeking to increase domestic contract prices by ¥20,000 a metric ton for sheets and plates for the year starting April 1, company officials, who asked not to be identified, said Feb. 12. Prices this year ranged between about ¥50,000 and ¥75,000, they said.

"The business environment won't let us raise prices," Toyota Chief Executive Officer Katsuaki Watanabe told journalists in Tokyo. "We aim to lower costs because of higher raw material prices."

A ¥20,000 increase in sheet metal prices would squeeze Toyota's operating profit by ¥100 billion, said Seiji Sugiura, a senior auto analyst at HSBC Securities Ltd.