Nippon Steel ends cooperation with Chinese partner over auto industry competition

Nippon Steel, Japan's largest steelmaker, will end its cooperation with Baoshan Iron & Steel Co., Ltd. (Baosteel) in light of fierce competition with Chinese suppliers in the automotive industry. The company decided to terminate the contract after the 20-year contract with Baosteel expired on August 29. "Today, Nippon Steel and Baosteel reached an agreement to exit the joint venture (50:50) at the end of the current Baosteel-Nippon Steel Automotive Steel Plate Co., Ltd. (BNA) management period, transferring its entire stake in BNA to Baosteel," Nippon Steel said on July 23.According to local media reports, BNA's annual plate production is 2.62 million tons, accounting for about 73% of Nippon Steel's total production capacity in China (3.6 million tons/year). It is understood that BNA produces cold-rolled and hot-dip galvanized plates using hot coils imported from Japan and supplies the products to Japanese automakers' Chinese factories.

However, Chinese producers have been shifting to increase the supply of plates for electric vehicle production. As a result, Japanese automakers are facing a decline in car sales to China for the third consecutive year. In the first half of 2024, the sales of the three major Japanese automakers (Toyota Motor, Nissan Motor and Honda Motor) in China fell by 13% year-on-year to 1.54 million vehicles. After withdrawing from the joint venture with Baosteel, Nippon Steel's production capacity in China will reach about 1 million tons/year, including the joint venture with Wuhan Iron and Steel Company.