Nippon Steel calls for Japanese tariffs on China’s exports

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, 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.

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, 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 included a lawsuit filed in 2021 by Nippon Steel seeking compensation for patent infringements by Toyota Motor and its supplier, Baowu’s unit Baoshan Iron & Steel.

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 (Aug 29) it aims to increase exports to more than 10 million tonnes by 2028, despite rising trade frictions, from as little as six million tonnes this year.

US deal

Mori also said that Nippon Steel remains positive it can close its acquisition of US Steel, a US$14.1 billion 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. BLOOMBERG