China’s policy of reducing greenhouse gas emissions is helping Nippon Steel, the world’s fifth-largest steel company, increase profits as iron ore prices plummet.
China helps Japanese steel company sublimate
According to Nippon Steel, China’s plan to reduce greenhouse gas emissions is creating favorable opportunities for steel factories around the world because this policy reduces steel output of the country of billions of people and pushes up the cost of steel. iron ore – the main source of raw materials for steelmaking, significantly cooling down.
Sharing in an interview with Bloomberg, Vice President Takahiro Mori of Nippon Steel, said that the largest steel company in Japan and currently ranked 5th in the world by output is on track to exceed its full-year profit target.
Nippon Steel’s outstanding business results were due to the recent increase in the steel price and the recent sharp drop in the iron ore price. These two factors help expand the profit margin of Japan’s largest steel company, Mr. Mori emphasized.
Nippon Steel benefits from China’s policy. (Artwork: Reuters).
In the first half of this year, mills in China shipped crude steel at a record high. However, Beijing still aims to keep total output in 2021 at the same level as last year.
Wood Mackenzie analyst Rohan Kendall commented: “The Chinese government’s goal is to force domestic steelmakers to cut production sharply in the second half of 2021.”
In July this year, the country’s steel output decreased by 8.4% over the same period last year. According to Bloomberg, the steel industry accounts for about 15% of China’s total carbon emissions and is the focus of leader Xi Jinping’s ambitious environmental plan.
China’s policy move, which is expected to last until the end of 2021, has caused iron ore prices to lose about 30% since mid-July. Meanwhile, hot-rolled steel prices in the country remained stable in past few months.
Nippon Steel’s Vice Chairman Mori emphasized: “China’s policy of cutting output and restricting steel exports is not only beneficial for us but also for all other steel companies.”
Record net profit
Earlier this month, Nippon Steel forecast net profit for the current fiscal year (to March 2022) to hit a record 370 billion yen ($3.4 billion). If so, it would be a big move after the past two years of losses.
The evolution of the COVID-19 pandemic in Southeast Asia and the semiconductor shortages affecting the auto industry are risks to Nippon Steel’s prospects, but Mr. may be insignificant.
Currently, Japan’s largest steel company is considering a major acquisition in Southeast Asia to expand the company’s production network. In addition, Nippon Steel is also interested in acquiring steel mills that integrate all processes to produce finished steel from raw materials.
In its five-year business plan announced in March this year, Nippon Steel has allocated about $600 billion for the goal of expanding production overseas, according to Bloomberg.
Japan, China and Europe have all committed to bring net emissions to zero, and at the same time put pressure on steel mills to produce carbon-free steel and cause no environmental pollution.
Last week, Asahi reported, the Japanese government is planning to allocate about 193.5 billion yen over 10 years for the production of steel based on hydrogen technology. This investment is from a green development fund worth 2 trillion yen.
Mori said that the moment when Nippon Steel can produce zero-emission steel will play an important role in the competition with Chinese rivals. He called on the Japanese government to provide more funding to bring the country’s steel industry on par with China.
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