Nippon Steel to dissolve JV with China's Baoshan, Nikkei reports
Adds Nippon Steel reaction in paragraph 8
TOKYO, July 23 (Reuters) -Nippon Steel 5401.T will dissolve its joint venture with China's Baoshan Iron & Steel 600019.SS, slashing the Japanese company's steel production capacity in China by 70%, the Nikkei business daily reported on Tuesday.
The company has decided to shift its attention to expansion in the United States and India, as its key customers, Japanese automakers, are facing tough competition with Chinese electric vehicle makers, the report said.
Nippon Steel has been looking to end cooperation with Baoshan, a subsidiary of state-owned China Baowu Steel Group, the world's largest steelmaker, for about two years, Nikkei said. Their 20-year agreement was set to expire this summer and will not be extended, it added.
Baoshan will buy Nippon Steel's share in the joint venture, with the deal estimated to cost several hundred million dollars, Nikkei said, without providing the exact figure.
After ending the JV, Nippon Steel will still have production capacity of around 1 million metric tonnes per year in China due to its joint business with Wuhan Iron and Steel, another unit of China Baowu Steel Group, Nikkei said.
The decision was not linked to Nippon Steel's bid for U.S. Steel X.N, which has led to some U.S. scrutiny over the Japanese company's assets in China, the Nikkei report said.
Nippon Steel said last week it had hired former U.S. Secretary of State Mike Pompeo to help with its effort to acquire U.S. Steel. Pompeo is visiting Japan this week, according to local media reports.
In a statement to Reuters, Nippon Steel said Pompeo had no connection to its decision on its China operations, declining to comment on the Nikkei report and on Pompeo's trip.
Baoshan did not immediately respond to Reuters' request for a comment.
Reporting by Satoshi Sugiyama and Katya Golubkova in Tokyo; additional reporting by Amy Lv in Beijing; Editing by Jamie Freed and Varun H K and Miral Fahmy
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
