The nation's stainless steel mills must combine or ally to regain ground lost to rivals in China and South Korea, Nisshin Steel Co.'s chief executive officer said.

"The current size of the operations is too small," Hideo Suzuki said in an interview at Nisshin Steel's Tokyo headquarters Wednesday. "The industry will need to consolidate."

Bigger steelmakers would be in a stronger position to negotiate raw material prices with suppliers and accelerate investments, Suzuki, 65, said.