The Japanese steel giant that helped China modernise its mills is
worried that a glut of the metal in its neighbour could hurt its domestic
market.
Nippon Steel Corp, the world’s fourth largest steelmaker, wants the Japanese
government to impose an anti-dumping tariff on Chinese steel, according to
Executive Vice-President Takahiro Mori. The company is lobbying Tokyo, along
with other Japanese mills, to take protective measures due to concerns that
exports from China will increase further, he said in an interview this week.
China’s steel exports surged this year to their highest since 2016 as local
demand has slumped due to a protracted crisis in the property market. Fears
that other countries are becoming a dumping ground for China’s excess product
has led to increased trade measures against the world’s biggest producer.
A lot of other countries, including in Europe, the US and South Korea have
introduced defensive measures, which means that “exports will pour into Japan
if it’s the only one without them,” Mori said.
Steel mills globally, including those in China, are feeling the pressure of the
market’s downturn. The world’s biggest steel producer, China Baowu Steel Group
Corp, earlier this month cautioned that the Chinese steel sector is in a “harsh
winter” that may be more challenging than the conditions seen in 2008 and 2015.
Nippon Steel is also bracing for what it calls an “unprecedentedly harsh
business environment.”
Nippon Steel helped kick-start China’s industry in the late-1970s by providing
technology and expertise. The company assisted Baowu’s listed unit in building
its first major coastal steel mill in Shanghai, completed in 1985, and their
cooperation helped ease often difficult relations between the two nations,
which reached their nadir with Japan’s occupation in the Second World War.
At a meeting with then-Chairman Yoshihiro Inayama, President Deng Xiaoping even
called Nippon Steel the “teacher” and China the “student.” China has since
replaced Japan as the world’s dominant producer and antagonism between the two
countries continues to periodically flare. On a commercial level, that’s
included a lawsuit filed in 2021 by Nippon Steel seeking compensation for
patent infringements by Toyota Motor Corp and its supplier, Baowu’s unit
Baoshan Iron & Steel Co. Nippon Steel exited a joint venture with Baosteel
last month as Japanese automakers struggle to maintain market share in Asia’s
biggest economy. The company will make decisions on other joint ventures it has
in China on a case-by-case basis, Mori said, adding that the firm’s strategy is
to expand investment in the US, India and the Asean region instead.
Baosteel for its part is expecting to sell even more steel abroad. The company
said on Thursday it aims to increase exports to more than 10mn tonnes by 2028,
despite rising trade frictions, from as little as 6mn tonnes this year.
Mori also said that Nippon Steel remains positive it can close its acquisition
of US Steel Corp, a $14.1bn deal that has become politically sensitive during
this year’s US presidential race.
“If it wasn’t an election year, this deal would have closed long ago,” Mori
said, adding that he is planning to visit the US and meet stakeholders next
month.
The executive recalled that he spoke with Minnesota Governor Tim Walz before he
was appointed as Kamala Harris’ vice-presidential candidate, at an opening
ceremony for a pellet production facility in the state in May. The governor was
“very positive” about Nippon Steel’s investment in US Steel, Mori said.