Nippon Steel, Japan’s number one steel company and third ranked rival Sumitomo Metal Industries will combine to form a giant second only to ArcelorMittal, but with distant margin of almost 50% capacity
In 2011, ArcelorMittal produced 97.2 million tonnes of crude steel, while Nippon Steel, ranked sixth largest, and Sumitomo Metal, ranked 27th, produced a combined 46.1 million tonnes
The launch comes at a difficult time for the Japanese steel industry.
Mr Hiroshi Tomono, Sumitomo Metal president, who will become the new company’s number two, told reporters last week “It is not a very good environment. We have an overwhelming advantage in terms of quality, but production costs are our problem.”
A senior Nippon Steel official said the Japanese firm would do well at the top end of the market, but would face difficulties competing with the lower cost bases of other Asian steelmakers. He said “We have a significant competitive edge in terms of highly functional steel products, but Chinese and South Korean steelmakers are catching up with us in terms of middle-level steel products.”
The merged company will aim to realign and strengthen a global network “in response to increasing worldwide demand for steel and the local procurement needs of Japanese steel consumers operating overseas. It will focus on reorganizing and expanding manufacturing, processing and sales bases in emerging countries namely China, Brazil, India and southeast Asian countries. The new company “will aim to achieve 60 million tonnes to 70 million tonnes in terms of global production capacity by further accelerating its overseas business development.
Sourced from Steelguru.com