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Oct 21, 2013 | 10:39 PM

Nisshin exploits newfound scale and synergies to hone its edge

Tags  Nippon Steel Corp., Sumitomo Metal Industries, Nisshin Steel Co. Ltd., Toshinori Miki, Jo Isenberg-O'Loughlin

Japanese mega-mills Nippon Steel Corp. and Sumitomo Metal Industries aren’t the only players among that country’s steelmaking elite to shed solo status and merge in a high-stakes bid to outlast intense competition on their home turf--and in their regional backyards--from counterparts in South Korea and China.

Size counts and although orchestrated on a less grandiose scale, the birth of Nisshin Steel Holdings, Co. Ltd. through the merger of Nisshin Steel Co. Ltd. and Nippon Metals Industry Co. Ltd. has a lot more in common with the marriage that created Nippon Steel & Sumitomo Metal Corp. (NSSMC), than the date--Oct. 1, 2012--on which both were officially established.

Both mergers were conceived against a global steel market in distress. Both are expected to deliver major savings--NSSMC some $2.25 billion and Nisshin Steel Holdings approximately $137 million by FY2016--and both are rooted in a deep and daunting structural change in the competitive landscape within as well as outside Japan.

“In the midst of a drastically changing economic environment, the steel industry is confronted with the enormous waves of fundamental shift including the upsurge of steelmakers in developing countries and restructuring designed to respond to global competition,” Toshinori Miki, president, chief executive officer and representative director of Nisshin Steel Holdings, Co. Ltd., told shareholders in a recent message. “In order to overcome these waves, we need to enhance our solid presence.”

Nisshin Steel, the smallest of Japan’s four blast furnace operators and that country’s third largest stainless steelmaker, produces some 150 different types of steel, offering a full spectrum of finished products ranging from coated steel (galvanized, aluminized, and copper-plated steel sheet and strip) to stainless steel sheet and strip, hot- and cold-rolled ordinary steel sheet and strip, and special steel. Key end markets include automotive, household and industrial electrical appliances, and the construction industries. ....