Posted on 20 May 2016
"It's going to be tough to run a steel business in around 2025 to 2030, after the Olympics, if we don't have many options, including partnering with an overseas company, considering that output capacity in Japan will be cut," chief executive officer Eiji Hayashida said yesterday in Tokyo.
Asked for details on potential consolidation, Hayashida said he's considering all options but that there were no concrete talks with any Japanese rivals. "It won't be a surprise to see global M&A or partnerships because of global competition," he said.
Intensifying competition is being led by the world's top supplier, China. Faced with its slowest growth in decades, the nation is exporting its surplus, hurting prices and stoking trade tensions. JFE's bigger peer, Nippon Steel & Sumitomo Metal Corp, said last week it will take control of Japan's No. 4 mill, citing a "rapid deterioration of the business environment" due to Chinese overcapacity.
Nippon Steel's move extends its lead in Japan. The company itself was created by a merger in 2012 of Nippon Steel Corp and Sumitomo Metal Industries Ltd, almost a decade after JFE Holdings was formed by the merger of Kawasaki Steel Corp and NKK Corp. The new constellation leaves Japan with just three blast-furnace steel-making groups, compared with six in 2000. Japan is the world's second-biggest steel supplier.
Looking back at the 2003 Kawasaki-NKK merger, Hayashida said the combined company was able to streamline operations more efficiently than each company could have done separately.
