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Reuters file photo Nippon Steel Corp.’s logo at the company’s headquarters in Tokyo on April 1.
The Yomiuri Shimbun
16:09 JST, July 24, 2024
Nippon Steel Corp. said Tuesday it will withdraw from its joint venture with Baoshan Iron & Steel Co. and end production of its automotive steel sheets in China.
The partnership began in 2004 and was under review by Nippon Steel ahead of the contract’s expiration on Aug. 29.
Nippon Steel will sell its entire stake in the 50:50 joint venture, Baosteel-Nippon Steel Automotive Steel Sheets Co., to Baoshan for 1.758 billion yuan (¥37.7 billion). Baoshan is a subsidiary of China Baowu Steel Group Corp., the world’s largest steel manufacturer.
The move will decrease Nippon Steel’s production capacity in China by about 70%. Japanese automakers are struggling in China primarily due to delays in responding to the demand for electric vehicles.
Japan-China economic cooperation began with the construction of a steel mill in China in the 1970s as a symbol of bilateral efforts, which are now facing a critical juncture.
Nippon Steel has been supplying steel sheets and other products to Japanese firms producing automobiles in China. However, it is believed the company decided to dissolve the joint venture for various reasons. These include not expecting an increase in demand due to the rapid growth of Chinese automakers, which are strengthening their EV productions, and the intensifying confrontations between the United States and China.
However, Nippon Steel plans to continue other businesses in China, including a joint venture that produces tinplate used for food cans.
Nippon Steel provided technical cooperation to Baoshan for an ironworks in Shanghai. Construction began in the 1970s as the centerpiece of economic cooperation following the normalization of diplomatic relations between Japan and China. The ironworks was completed in 1985 and the project was depicted in the novel “Daichi no Ko” (Child of the Earth), by Toyoko Yamasaki.
