World’s Second Steelmaker Created though Nippon Steel and Sumitomo Fusion

Added by Gary Dunn on February 7, 2011

Japanese steelmaker Nippon Steel Corp might acquire Sumitomo Metal industries in order to merge the two companies in a sole one that would be the world’s second largest steel making company.

The move would come in a time when the Japanese steelmakers are fighting their Asian competition, while demand from domestic automakers shrinks and prices for coking coal and iron ore are continuously surging.

Sumitomo Metal Industries, the Japanese steelmaking company, which was valued at $11bn, would be acquired by Nippon Steel Corp, creating the No.2 steelmaker in the world after ArcelorMittal.

Analyst at CLSA Jeremie Capron stated for Reuters that he believes that the to-be-formed group would have high chances in Asia.

“The merged company will have the best product line-up in the industry ranging from construction steel, auto steel sheets, thick plates to seamless pipes. That’s quite unique, and the number one company, ArcelorMittal, does not have such a product line-up,” stated analyst Capron as quoted by Reuters.

The steekmakers from Japan have seen a decrease in number lately since local automakers such as Nissan and Toyota have produce a lower number of cars in the country since they began their expansion and focused on emerging markets like India, from where they also purchased the materials they needed.