Japanese mills merge their stainless steel operations

Japanese mills merge their stainless steel operations

Major Japanese steelmaker Nippon Steel Corp. and Sumitomo Metal Industries (SMI) Japan's fourth largest steelmaker under Sumitomo Group, very recently announced that they decided to merge their stainless steel operations to be effective October 1, 2003. A third company will be established under this joint venture, 80% stake of which will be held by Nippon and 20% by SMI. Both companies will transfer their stainless steel operations to this third company. The forecasted output of the company is 1million tons annual, and the sales are expected to be around Yen 150 billion (approximately $1.2 billion). Falling product prices with the increasing trend of raw material costs on the contrary besides the global overcapacity problem and shrinking Japanese domestic market has been leading steel producers into such alliances lately.