By Yuka Obayashi, Katya Golubkova and Ritsuko Shimizu

TOKYO (Reuters)

Nippon Steel and other Japanese steelmakers are urging Tokyo to consider curbing cheap steel imports from China, the world’s biggest steel producer, to protect the Japanese market. Nippon Steel Vice Chairman Takahiro Mori stated in an interview that the company is pushing for government measures to regulate these imports.

As Nippon Steel attempts to finalize its acquisition of U.S. Steel, critical for its global expansion, Mori indicated he has received support from Minnesota Governor Tim Walz for the takeover, although Walz has not commented on the deal since becoming the Democratic vice presidential candidate.

China’s steel exports surged by 24% to 53.4 million tons in the first half of 2024, on pace to reach 100 million tons for the year. Japan, the third-largest steel producer, saw a 17% increase in ordinary steel imports to 1.32 million metric tons from April to June, with imports from China skyrocketing by 43%, according to data from the Japan Iron and Steel Federation.

Mori warned that China’s steel exports could rise even more as local demand decreases by about 30 million tons annually. He emphasized the need for Japan to adopt measures such as anti-dumping duties to protect its market, particularly since other regions like the U.S., Europe, and South Korea have already implemented trade policies against Chinese steel imports.

Due to these developments, Mori noted that Japan is in a precarious situation and must take action to safeguard its market. This potential government intervention would mark a significant shift, as Japan typically faces anti-dumping actions from other nations.

EXPANSION IN US, COKING COAL

Nippon Steel, the fourth-largest steelmaker globally, aims to complete its $14.9 billion acquisition of U.S. Steel by the end of 2024, which Mori estimates will boost profits by 30 to 40 billion yen ($208 million to $277 million) in Q1 2025. Notably, the company’s net profit forecast of 340 billion yen for the fiscal year does not include this acquisition, which has encountered opposition across party lines, including from presidential candidate Donald Trump.

Mori has traveled to the U.S. five times this year to engage with stakeholders and met with Walz during a U.S. Steel plant inauguration in Minnesota in June, prior to Walz being selected as Kamala Harris’s running mate. Mori noted Walz’s strong interest in U.S.-Japan relations and support for the acquisition.

He is planning another U.S. trip next month to continue discussions. To bolster political and labor union support, Nippon Steel has hired former U.S. Secretary of State Mike Pompeo as an advisor and announced plans to invest an additional $1.3 billion in U.S. Steel’s facilities.

Recently, Nippon Steel undertook a significant investment move by agreeing to purchase a 20% stake in the Blackwater coking coal mine in Australia for $720 million in collaboration with Whitehaven Coal. This deal is intended to increase Nippon Steel’s self-sufficiency in coking coal, a critical component for steel production, to 35%. The company aims for a higher ratio of over 40% to mitigate the influence of fluctuating raw material prices.

Mori indicated a willingness to explore further acquisitions in coking coal if favorable opportunities arise but refrained from commenting on potential bids for Anglo American’s coking coal assets.

($1 = 144.5600 yen)