Daily Management Review

Nippon Steel’s Attempts To Become ‘An Insider’ Of Promising Indian Market


08/27/2018


In a joint bid, Nippon Steel aims to secure Essar Steel under its wings, while legal issues introduce delay.



Nippon Steel and Sumitomo Metal Corp are the leading steel manufacturers of Japan, who consider India as the “most promising market” space, whereby they intends on becoming “an insider” for capitalising on the growing trend of the “third-biggest steel market” of the world, stated an executive from a senior post.
 
During an interview, the executive vice president of Nippon Steel, Katsuhiro Miyamoto said:
“India will be the fastest-growing steel market in the world going forward”.
“But since it’s not an easy market to export to due to trade and distribution issues, it’s important for us to become an insider. That’s why we are bidding for Essar Steel”.
 
In this endeavour, Nippon Steel joined hands with ArcelorMittal which is the “largest steel makers” of the world based out of Luxembourg, whereby the duo plans on bidding around “$6 billion” on the “bankrupt Essar Steel” which happens to be the fourth biggest steelmaker in the Indian market index. However, there seems to be a delay in the “bidding process” as some “legal battles” determining the bidders’ eligibility is causing hurdles.
 
When, Miyamoto was asked if the bidding race chances seemed to be in Nippon’s favour, the answer came as:
“We have always believed so.”
“We have submitted all the documents requested to the National Company Law Appellate Tribunal (NCLAT) and we expect their decision by the end of this month”.
 
According to the forecast of the World Steel Association, the demand for steel in Indian market in likely to jump up by 5.5% in 2017, while in the following year the jump is going to be around 6%, whereby turning into the “fastest-growing market among the world’s top ten steel consumption countries”.
 
Furthermore, Reuters added:
“Even so, Japan’s steel exports to India nearly halved in 2016 after India imposed duties of up to 20 percent on some hot-rolled flat steel products in September 2015. India also set a floor price in February 2016 for steel product imports to deter countries such as China, Japan and South Korea from undercutting local mills”.
 
After that the annual Japanese steel export figures to India only contributes to 3% of the country’s “total exports of the metal”. In a joint venture, Nippon Steel along with Tata Steel of India produce “cold-rolled sheets for automobiles”, although the presence in this niche is a feeble one in comparison other usage of steel in other parts of South Asian countries. And Miyamoto added:
“If we can buy Essar, it will give us access to India’s general steel users including builders”.
 
 
References:
reuters.com







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