Nippon Steel Corp., Japan's biggest steel maker, and Sumitomo Metal Industries Ltd., the nation's third-ranked steel maker, announced Feb. 3 a plan to merge in October 2012. The merger, if it materializes, will bring about the world's No. 2 steel maker after Luxembourg-based ArcelorMittal, which produces about 10 percent of the world's crude steel.
The merger follows two major consolidations in Japan's steel industry — the 1970 merger of Yawata Iron and Steel and Fuji Iron and Steel into Nippon Steel and the 2002 merger of Kawasaki Steel and NKK into JFE Holdings, now Japan's No. 2 steel maker.
The merger plan represents the two firms' attempt to survive in the global steel market where Japanese steel makers' influence has been declining. In terms of global crude steel production, Nippon Steel, once the No. 1, was ranked sixth and JFE ninth in 2009. Nippon Steel and Sumitomo Metal Industries together produce only about 3 percent of global crude steel.