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Tuesday March 27, 3:03 PMNippon Steel, Tata in talks on joint outputTOKYO, March 27 (Reuters) - Nippon Steel Corp. said on Tuesday it is in talks with India's Tata Steel on the possible joint production of car-use sheet steel to meet growing demand in India.Such a move would make the world's second-largest steel maker the first big Japanese steel firm to tap India's rapidly growing car market. It may also indicate that Japanese car makers have more output plans in India. The Nikkei business daily reported earlier that Nippon Steel and Tata were likely to invest about 50 billion yen ($420 million) to build a plant with an annual capacity of around a million tonnes of thin sheet mainly for auto bodies by 2010. Nippon Steel said in a statement, "We will proceed with discussions monitoring demand and other situations in the market." With Japanese automakers such as Toyota Motor Corp. expanding overseas output, Japanese steelmakers Nippon Steel and world No. 4 JFE Holdings Inc. have come under pressure to raise their production in the world's leading auto markets. The automakers are keen to have domestic steel makers set up shop and raise output to lower their own manufacturing costs. "If Nippon Steel is positively considering an entry into India, there is a possibility that Toyota or other top Japanese carmakers have plans to boost output there," said Takashi Murata, analyst at Daiwa Institute of Research. Japanese car makers' output in India is currently small, but demand for sheet steel is expected to rise fast if Toyota, Suzuki Motor Corp. and Honda Motor Co. increase output in the future. Rivals like Arcelor Mittal and POSCO are already building large plants in India. Nippon Steel has been increasing its presence overseas, including in many emerging markets. Late last year it brought Brazil's biggest steel maker Usiminas into its group, strengthening a foothold in one of the world's fastest growing markets. It has said that it is studying plans to boost output of car-use sheet steel by 500,000 tonnes in the United States and that it is considering raising output at its joint venture in Shanghai. Nippon Steel President Akio Mimura told Reuters in an interview last year that the company may also look at the possibility of adding a new production line in Thailand, where annual car production has topped 1 million units. Thanks to strong worldwide sales of Japanese cars, Nippon Steel earlier this month raised its full-year forecast for the third time in six months on booming demand from carmakers and said it would post a record profit for a third straight year. Shares in Nippon Steel ended up 1.2 percent at 873 yen, while the iron and steel subindex was up 0.1 percent. |
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