In the past week, a major news in Japan’s industry has buzzed with enthusiasm. Japan’s two major steel companies, Nippon Steel and Sumitomo Metal Industries, announced on the 3rd that they would initiate merger negotiations to complete the merger in October next year. It is hoped that crude steel will be born. The second largest steel group in the world.
According to the arrangement, Nippon Steel and Sumikin will set up a “Merger Research Committee†to conduct specific consultations on the merger method, shareholding ratio, company name, and composition of management. The two companies are expected to sign the merger agreement by April next year and formally merge on October 1st next year.
Why do these two well-run companies decide to merge? From the report of the Japanese media, there is only one answer, namely, targeting the global market.
First of all, the merger of the two companies is complementary, and can make the company stronger in the global competition. From a technical point of view, Nippon Steel has advantages in lightweight, high-strength special steel plates, and electromagnetic steel plates used in motor core components in automobiles in which emerging countries’ demand has soared. Sumitomo Metal Industry’s strength in seamless steel pipes Leading, in the world market, the Sumitomo Metal Industry and the European two companies are actually in a monopoly position. The merger of the two major steel giants hopes to further enhance their competitiveness in the global fierce competition through technological advantages.
Second, the merger of the two largest steel giants on the scale further expanded. After the merger, the two companies will occupy half of the Japanese steel market, and even more importantly, they will take second place among global steel companies. Although they are far from the largest Arcelor-Mittal steel company in the world, they are in technology. In terms of overall strength, it can reach the top level in the world.
Due to the reduction of domestic steel demand in Japan and the rise of emerging overseas forces, Japan’s steel companies have been declining in scale in recent years. In 1970, Nippon Steel and Fuji Steel’s combined Nippon Steel Corporation’s steel output accounted for the world market. More than 5% of the shares were ranked first, falling to 2.7% in 2006, ranking third, dropping to 2.2% in 2009, slipping to sixth place, ranking in China's Hebei Iron and Steel Group, Baosteel Group, Wuhan Iron and Steel Group After South Korea's Pohang Iron and Steel Company. Although the president of Nippon Steel Co., Ltd. Sakaoka, who has repeatedly stated that he does not pursue the scale and survive on the basis of quality, the rapid decline in rankings is not always a taste for the Japanese who have the first consciousness. If this merges, Succeeded in the position of being the second child in the world, many Japanese people will feel the psychological balance. This is one of the reasons why the Japanese media has been frying. In addition, relevant experts predict that by the year 2050, the world's steel demand will be doubled compared to the present and will be about 2.7 billion tons. To maintain the competitiveness of steel companies, it is necessary to expand the scale.
Again, the merger of the two companies can increase their bargaining power in negotiations with the iron ore giants. Due to the monopoly of the world’s iron ore giants, steel companies are very passive in negotiations with iron ore giants, doubling iron ore price increases in 2010, and Japanese steel companies are also victims, although Japanese steel companies in Brazil’s Vale Iron ore production companies have certain rights and interests, but the self-sufficiency rate is still too low after all. Nippon Steel’s iron ore self-sufficiency rate is only 35%. In 2010, the cost of raw materials for Japanese steel companies increased by more than 1 trillion yen from the previous year. Nippon Steel Corporation and Sumitomo Metal Co., Ltd. Although the share is still not enough, but after all, is the world's second child, how many can always increase some of the bargaining chips.
Japanese companies are changing. Due to sluggish domestic demand, more and more companies are focusing on overseas and the color of globalization is becoming increasingly strong. After this merger is successful, it may lead to more Japanese companies to follow suit.
According to the arrangement, Nippon Steel and Sumikin will set up a “Merger Research Committee†to conduct specific consultations on the merger method, shareholding ratio, company name, and composition of management. The two companies are expected to sign the merger agreement by April next year and formally merge on October 1st next year.
Why do these two well-run companies decide to merge? From the report of the Japanese media, there is only one answer, namely, targeting the global market.
First of all, the merger of the two companies is complementary, and can make the company stronger in the global competition. From a technical point of view, Nippon Steel has advantages in lightweight, high-strength special steel plates, and electromagnetic steel plates used in motor core components in automobiles in which emerging countries’ demand has soared. Sumitomo Metal Industry’s strength in seamless steel pipes Leading, in the world market, the Sumitomo Metal Industry and the European two companies are actually in a monopoly position. The merger of the two major steel giants hopes to further enhance their competitiveness in the global fierce competition through technological advantages.
Second, the merger of the two largest steel giants on the scale further expanded. After the merger, the two companies will occupy half of the Japanese steel market, and even more importantly, they will take second place among global steel companies. Although they are far from the largest Arcelor-Mittal steel company in the world, they are in technology. In terms of overall strength, it can reach the top level in the world.
Due to the reduction of domestic steel demand in Japan and the rise of emerging overseas forces, Japan’s steel companies have been declining in scale in recent years. In 1970, Nippon Steel and Fuji Steel’s combined Nippon Steel Corporation’s steel output accounted for the world market. More than 5% of the shares were ranked first, falling to 2.7% in 2006, ranking third, dropping to 2.2% in 2009, slipping to sixth place, ranking in China's Hebei Iron and Steel Group, Baosteel Group, Wuhan Iron and Steel Group After South Korea's Pohang Iron and Steel Company. Although the president of Nippon Steel Co., Ltd. Sakaoka, who has repeatedly stated that he does not pursue the scale and survive on the basis of quality, the rapid decline in rankings is not always a taste for the Japanese who have the first consciousness. If this merges, Succeeded in the position of being the second child in the world, many Japanese people will feel the psychological balance. This is one of the reasons why the Japanese media has been frying. In addition, relevant experts predict that by the year 2050, the world's steel demand will be doubled compared to the present and will be about 2.7 billion tons. To maintain the competitiveness of steel companies, it is necessary to expand the scale.
Again, the merger of the two companies can increase their bargaining power in negotiations with the iron ore giants. Due to the monopoly of the world’s iron ore giants, steel companies are very passive in negotiations with iron ore giants, doubling iron ore price increases in 2010, and Japanese steel companies are also victims, although Japanese steel companies in Brazil’s Vale Iron ore production companies have certain rights and interests, but the self-sufficiency rate is still too low after all. Nippon Steel’s iron ore self-sufficiency rate is only 35%. In 2010, the cost of raw materials for Japanese steel companies increased by more than 1 trillion yen from the previous year. Nippon Steel Corporation and Sumitomo Metal Co., Ltd. Although the share is still not enough, but after all, is the world's second child, how many can always increase some of the bargaining chips.
Japanese companies are changing. Due to sluggish domestic demand, more and more companies are focusing on overseas and the color of globalization is becoming increasingly strong. After this merger is successful, it may lead to more Japanese companies to follow suit.
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