Nippon Steel Aims to Meld Tech Strengths With U.S. Steel; Both Firms Have Valuable Decarbonization Know-How
2:00 JST, December 21, 2023
Nippon Steel Corp.’s acquisition of United States Steel Corp. is aimed at securing a stable supply of high-quality steel materials for Japanese manufacturers of automobiles and other products operating in the United States. It also intends for close cooperation with the long-established U.S. steelmaker to strengthen supply chains and accelerate technological development for decarbonization.
Nippon Steel announced Monday that it would buy U.S. Steel for more than ¥2 trillion to make the major U.S. steelmaker a wholly owned subsidy in 2024.
At an online press conference on Tuesday, Nippon Steel President Eiji Hashimoto said that the aim of the buyout is to “deal with economic security.”
As steel materials are both bulky and heavy, producing them at factories near where they will be used can reduce costs compared to producing them in Japan and exporting them. This also strengthens competitiveness.
In response to the shrinking steel market in Japan, Nippon Steel has been focusing on cultivating overseas markets where growth in demand is expected, buying an Indian steelmaker in 2019 and a Thai steelmaker in 2022.
The United States cannot cover all of its own demand with its domestic factories. The U.S. self-supply ratio for steel materials is 70%, with the remaining 30% depending on imports. The United States is a promising market where demand is expected to increase, due to long-term population growth as well as economic growth based on the return of the manufacturing industries to the United States.
Meanwhile, the U.S. market has been difficult for Nippon Steel to enter because the United States is a protectionism-prone country and imposes additional tariffs.
Hashimoto stated, “We have been discussing for about two years how our U.S. businesses should be.”
It is possible that after the U.S. Steel purchase, Nippon Steel will be able to strengthen supply chains of steel materials for Japanese auto and other manufacturers operating in the United States, using materials produced at U.S. Steel factories in the United States with Nippon Steel’s technology.
Steel production emits huge amounts of carbon dioxide as a result of a reaction of iron ore and coal in furnaces. There is an urgent need to deal with decarbonization. An electric furnace that would emit 75% less carbon dioxide is being developed. A method for producing steel materials with hydrogen is also being developed, as it also greatly cuts carbon dioxide emissions.
U.S. Steel’s strong points include technology for producing magnetic steel sheets in an electric furnace for motors of electric vehicles, and technology for efficient large-scale electric furnaces.
Meanwhile, Nippon Steel is promoting the development of steelmaking with hydrogen.
“I think gathering each other’s technologies will further accelerate progress toward decarbonization,” Hashimoto said.
"Business" POPULAR ARTICLE
-
Japan’s Major Carmakers to Review Production Bases After Trump Win; Mexico Manufactured Vehicles Could be Hit by Tariffs
-
Japanese Companies Sprucing Up Employee Dorms to Attract New Workers, Keep Young Ones They Have
-
Japan’s Economy Expands Annualised 0.9% in Q3 on Tepid Capex
-
BOJ Policy Normalization to Support Long-Term Growth: Ueda
-
Draft of Japan Govt Economic Plan Stipulates Support for AI, Semiconductor Sectors; Increased Household Benefits, Improved Disaster Shelters also eyed
JN ACCESS RANKING
- Streaming Services Boost Anime Popularity Overseas; Former ‘Geeky’ Interest More Beloved Among Gen Z than 3 Major U.S. Sports
- Malaysia Growing in Popularity as Destination for Studying Abroad; British-style Education Available at Low Cost
- ‘Women Over 30 Would Have Uteruses Removed’; Remarks of CPJ Leader, Novelist Naoki Hyakuta Get Wide Attention
- APEC Leaders Vow to Maintain Free Trade System
- Neko Pitcher