Published by Global Banking & Finance Review®
Posted on January 24, 2025
5 min readLast updated: January 27, 2026
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Nippon Steel plans expansion in the US and India to counteract Chinese exports, following a blocked US Steel deal. The company seeks to boost global production and profits.
By Katya Golubkova and Yuka Obayashi
TOKYO (Reuters) -Nippon Steel is poised to expand its operations in the U.S. and India as it hunts for growth and protection from cheap Chinese exports after its bid for U.S. Steel was blocked by the White House, analysts say.
Japan's top steelmaker, battling declining domestic demand, made the $14.9 billion bid for the U.S. producer in an attempt to grow its footprint in a stronger market. But its hopes of salvaging the deal after President Joe Biden's rejection on national security grounds are dependent on a lawsuit that is viewed as a long-shot.
China, by far the world's largest steel producer, has flooded the market with near-decade high export volumes as its struggling property sector weighs on domestic demand, upending the global steel industry and leading Nippon Steel to invest more in raw materials and in production outside its home market.
"China's over-capacity is likely to continue to place pressure on steel exporters... and heighten the need for Nippon Steel to access jurisdictions with growing domestic demand," said Kyle Lundin, principal consultant at Wood Mackenzie.
Nippon Steel, the world's fourth-largest steel producer, has a long-term plan of boosting crude steel production capacity to over 100 million metric tons a year from about 65 million tons at present and lifting profits toward 1 trillion yen ($6.32 billion) a year from a 780 billion yen target in the financial year ending in March.
"To be a 'truly' global steel producer, greater production capacity above current state is likely required," said Wood Mackenzie's Lundin.
Greater production capacity gives flexibility to cut output in one place and increase it in another where demand is more solid in order to boost margins.
The United States is the most promising market among developed countries with a large demand for advanced steel products like the ones used in electric cars, Nippon Steel CEO Eiji Hashimoto told reporters on Tuesday.
He said the company was not yet considering alternatives to the U.S. Steel plan, adding it would not give up on expanding in the United States.
"Considering the current industrial and energy policies, the demand for advanced steel will increase even more in the future. At any rate, the U.S. business is essential to our global strategy," Hashimoto said.
Nippon Steel has operated in the country since the 1980s and has a number of U.S. assets, including its prime facility, a joint venture with ArcelorMittal in Calvert, Alabama, purchased a decade ago.
"While domestic demand in the U.S. is increasing, its production capacity is smaller than that of domestic demand, making it a net importer," said Ryunosuke Shibata, an analyst at SBI Securities in Tokyo.
The Calvert plant produces steel sheets using semi-finished products secured at home and overseas and the joint venture is investing nearly $800 million in an electric arc furnace of 1.5 million tons of annual capacity to reduce dependence on third-party supplies.
Wood Mackenzie's Lundin said Nippon Steel could also look at other U.S. investments and acquisitions that may not pose the same political and national security hurdles.
U.S. Steel, founded in 1901 by business icons Andrew Carnegie, J.P. Morgan and Charles Schwab, has a heavily unionised workforce and a brand once seen as a symbol of the country's industrial might.
INDIA OPPORTUNITIES
Nippon Steel has been recently strengthening its raw material operations by snapping up mining assets globally, including purchases of iron ore and coking coal assets in Canada and Australia over the last year.
It has also asked the Japanese government to restrict imports of steel from China to protect the local market where production is shrinking due to slow demand from the manufacturing and construction sectors.
"Japan's domestic demand is decreasing, so they have to go global and India currently is doing well," said SBI's Shibata.
India is the world's second-biggest steel producer, but like the U.S. it is a net importer as demand increases.
India's domestic steel demand is seen growing 8.5% this year, according to the World Steel Association, versus a 1.2% rise in global consumption.
China was India's top steel supplier in April-November last year, the latest data available, with imports reaching an all-time high of nearly 2 million tons, a 23% increase year-on-year, government data showed.
With India considering an increase to import tariffs for protection against Chinese steel, the market could offer solid growth opportunities.
"The foundation of our global strategy is to operate in markets with growing demand where we can leverage our technological strengths," Hashimoto said on Tuesday. "In line with this approach, we are actively expanding our business in India and ASEAN countries, particularly Thailand."
In India, Nippon Steel has had a joint venture with ArcelorMittal since 2019, but it is a smaller player compared to Tata Steel and JSW Steel, according to Lakshmanan R, senior research analyst at CreditSights Singapore.
To narrow the gap, the joint venture, India's fourth-largest steelmaker, plans to increase steel production capacity to 15 million tons per year by the end of 2026 from 9 million tons annually now.
"The attractiveness of the Indian market lies in its growth of demand," Nippon Steel Vice Chairman Takahiro Mori said in November. "In this growing market, we are determined to steadily expand and further raise our market share in accordance with our plans."
($1 = 158.1300 yen)
(Reporting by Katya Golubkova, Yuka Obayashi and Ritsuko Shimizu in Tokyo, Amy Lv in Beijing and Neha Arora in New Delhi; Editing by Jamie Freed)
The article discusses Nippon Steel's expansion plans in the US and India due to challenges from Chinese steel exports and a blocked US Steel deal.
Nippon Steel is expanding to counteract the effects of cheap Chinese steel exports and to find growth opportunities in stronger markets like the US and India.
Nippon Steel faces challenges from declining domestic demand and the blocked acquisition of US Steel due to national security concerns.
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