NKK Corp., Japan's second-largest steelmaker, said Thursday it is holding talks with a steel unit of major German industrial group Thyssen Krupp AG to strengthen technological cooperation.

The move follows an announcement Tuesday by Nippon Steel Corp., Japan's top steelmaker, that it has signed an alliance accord with France's Usinor SA, Europe's largest steelmaker, in the steel sheet business for automobiles.

NKK said the talks with Thyssen Krupp Stahl AG are mainly aimed at meeting global demand from automakers. It has already had technology exchanges with the German firm.

Details of the discussions cannot be disclosed at the moment, NKK said in a statement. But industry officials said the two companies appear to be negotiating a technological tieup in the business of steel sheets for use in automobiles.

They said there is a chance that Kawasaki Steel Corp., another major steelmaker seeking an alliance with NKK, will join the planned tieup between NKK and Thyssen Krupp.

Industry analysts said Japanese steelmakers have been looking for ways to join the bandwagon of Japan's automakers expanding their production bases in Europe.

Under the agreement between Nippon Steel and Usinor, the two firms will manufacture jointly developed steel sheet products to supply automakers worldwide.

Joint venture plan

Major trading houses Mitsubishi Corp. and Nissho Iwai Corp. announced Thursday they have agreed to integrate their steel products operations under a joint venture by the fall of 2002.

The two companies said the plan is part of their agreement to consolidate all of their metal operations on an equal basis in the future. They said they decided to start with steel products operations in view of that area's high growth potential.

The companies said they are considering spinning off their steel products operations by October before integrating them under the joint venture.

The trading houses said the venture is expected to generate 2.2 trillion yen in sales on a consolidated basis. The venture will have about 1 trillion yen in assets and 1,100 employees.

They said details, including the stake each company will have in the joint venture, are yet to be decided. The venture should help the companies make their steel businesses, established networks and knowledge more valuable, they said.

To ensure the consolidated effects of the new venture, each company will set up a section at its headquarters to work with the new venture, they added.

Mitsubishi is Japan's second-largest trading house in terms of sales and a leader in the market for steel plates used for automobiles. Fourth-ranked Nissho Iwai is a top seller of specialty steel products and wire rods.

The move is in line with the industry-wide consolidation trend amid declining revenues due to intensifying competition among steelmakers and cost-cutting by automakers, the largest users of steel products.

Itochu Corp. and Marubeni Corp., for example, are in talks on merging their steel product units.