Steelmakers consider tieup to battle JFE Holdings

Nippon Steel Corp., Sumitomo Metal Industries Ltd. and Kobe Steel Ltd. are studying a capital tieup that would see the nation’s steel industry reorganized into two groups, according to company sources.

The move comes on the heels of the Sept. 27 creation of JFE Holdings Inc., a holding company with NKK Corp. and Kawasaki Steel Corp. under its umbrella.

The creation of the holding firm led to the consolidation of the facilities operated by NKK and Kawasaki Steel.

Although Nippon Steel has separate business tieup agreements with Sumitomo Metal and Kobe Steel, Sumitomo Metal and Kobe Steel have no such partnership.

Nippon Steel and Sumitomo Metal said in brief statements Monday that nothing has yet been decided regarding the capital tieup and denied plans to integrate their businesses.

Kobe Steel said in a separate statement that nothing has yet been decided on the capital tieup.

Sumitomo Metal, which has around 1.6 trillion yen in interest-bearing debts, is trying to hammer its finances into shape and is in the final stages of investment talks with Nippon Steel, the sources said.

Kobe Steel may also take a stake in Sumitomo Metal, allowing Nippon Steel, Sumitomo Metal and Kobe Steel to all hold shares in each other’s firms, they said.

Nippon Steel had earlier agreed with Sumitomo Metal to integrate their welding material and stainless steel operations.

Nippon Steel and Kobe Steel jointly supply Nakayama Steel Works Ltd., which has halted the operation of its blast furnace, with semifinished products.

They also cooperate on transportation and facility repair.

The three steelmakers hope their capital tieup will help them compete with JFE Holdings, the sources said.