Nippon Steel Sees New Opportunities In India

Japan's chief steelmaker Nippon Steel & Sumitomo Metal Corp views India as the most promising market and wants to become an “insider” to capitalize on the growth of the world's third-largest steel market, the executive said.

“India will become the fastest growing steel market in the world in the future,” he said in an interview. “But since steel exports are not a simple market due to trade and distribution problems, it is important for us to become an insider. That is why we are bargaining for Essar Steel, ”he said.

Nippon Steel has teamed up with Luxembourg-based ArcelorMittal, the world's largest steelmaker, to offer about $ 6 billion to bankrupt Essar Steel, India's fourth-largest steelmaker. But the bidding process has been postponed due to legal battles over the right to participate in tenders.

The World Steel Association (WSA) predicts that steel demand in India will increase 5.5% in 2018 and 6% in 2019, becoming the fastest growing market among the world's ten largest steel consuming countries.

Despite this, Japanese steel exports to India nearly halved in 2016 after India imposed duties of up to 20% on some hot rolled flat steel products in September 2015. India also set a floor price in February 2016 for steel imports to deter countries like China, Japan and South Korea from trimming local mills. Since then, India's annual steel exports to India have been around 1.3 million tonnes, accounting for only 3% of the country's total exports.

Nippon Steel has a joint venture with India's Tata Steel to produce cold rolled sheets for automobiles, but it has little involvement in the production of steel used in other parts of the South Asian country. “If we can buy Essar, it will give us access to general consumers in India, including builders,” Miyamoto said.

Nippon Steel said it will spend 600 billion yen ($ 5.4 billion) in March on business investments, including mergers and acquisitions, over the next three years to spur global expansion.