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On Monday evening, Beijing time, Nippon Steel and U.S. Steel jointly announced that Nippon Steel's acquisition of U.S. Steel for $14.1 billion will be a large-scale restructuring of the Japanese and U.S. steel industries, or will have a profound impact on the pattern of the global steel industry.
It is understood that the reason why Nippon Steel chose to acquire U.S. Steel is because the company needs to seek a way out in the market with development potential in the case of a decrease in domestic steel demand due to a declining birthrate and aging population. According to public information, U.S. Steel Corporation was founded in 1901 and is the first "$1 billion company" in U.S. history, with a long history and a huge market share.
The two companies said the deal has received unanimous approval from their respective boards of directors and is expected to close in October next year, subject to approval from U.S. Steel and regulators. The United Steelworkers has said it will "strongly urge" regulators to scrutinize the acquisition to determine whether it is in the national security interests of the United States and benefits workers.
Nippon Steel said that "the United States is the largest market among developed countries and expects its high level of demand for high-grade steel".
In addition to the huge amount, the deal will have a profound impact on the landscape of the global steel industry.
Nippon Steel has acquired steel companies in India and Thailand, according to public market information, and the acquisition is expected to bring Nippon Steel's annual crude steel production capacity to 86 million tons, which is likely to be the second largest in the world after China's Baowu Steel, which will be one step closer to the company's strategic goal of "100 million tons per year".
The mainland steel industry is one of the pillar industries of the national economy, with abundant resources and advanced production technology. With the deepening of reform and opening up and the development of market economy, the mainland steel industry has made great progress and has become one of the world's largest steel producers. Mainland iron and steel enterprises have continuously improved product quality and technical level, expanded the international market, and realized the transformation from bulk exports to high-end product exports.
——China Baowu Iron & Steel Group ranks first in the world in terms of output
According to crude steel production data, China Baowu Iron & Steel Group ranked first in the world with 120 million tonnes in 2021, followed by ArcelorMittal Group, a global company headquartered in Luxembourg, with 80 million tonnes of crude steel, and Anshan Iron & Steel Group and Nippon Steel Corporation in Anshan, Liaoning Province, China, ranked third and fourth respectively. Among the top 10 global steel companies, Chinese companies occupy 6 seats, and Japan, South Korea and India each have 1.
——Global steel patents: China accounts for 70.84%
As of May 13, 2022, mainland China is the world's largest source of steel technology, accounting for 70.84% of the total global steel patent applications, followed by Japan with 14.20%. The United States and Germany rank third and fourth in the world respectively, accounting for 5.43% and 2.12% respectively, which is a big gap compared with the mainland.
——Leading enterprise in mainland steel industry: Baosteel Co., Ltd
Baosteel Co., Ltd. is currently the leading enterprise in the steel industry with the largest business scale, the strongest profitability of steel-related business, the widest coverage of infrastructure construction and the largest industrialization scale in mainland China.
From the perspective of Baosteel's operation, from 2017 to 2021, the three main economic indicators of Baosteel's net profit, operating profit and operating income all showed a fluctuating and increasing trend. As of the end of 2021, Baosteel achieved a net profit of 26.455 billion yuan, a year-on-year increase of 89.17%, an operating profit of 32.563 billion yuan, a year-on-year increase of 92.06%, and an operating income of 365.342 billion yuan, a year-on-year increase of 28.44%.
According to data from the China Metallurgical Industry Planning and Research Institute, China's steel output has ranked first in the world for 26 consecutive years, becoming a global steel production and consumption center. As of 2022, the country's cumulative crude steel production reached 1.018 billion tons, accounting for 54.0% of the global total.
Lu Chunfang, director of the Department of Engineering Management of the Chinese Academy of Engineering and academician of the Chinese Academy of Engineering, said: "At present, the development of the mainland steel industry has gradually entered a period of deep adjustment. ”
Kou Jingna, an associate professor at the School of Economics and Management at Taiyuan University of Technology, took Shanxi enterprises as an example to introduce the practices of Chinese enterprises in carbon reduction practices. She pointed out that Shanxi's iron and steel enterprises have begun to take measures to promote low-carbon transformation, such as upgrading traditional processes, promoting the digitalization of the whole process, investing in photovoltaic power generation projects, exploring hydrogen metallurgy technology and steel co-production, and integrating steel and coke. However, Shanxi's coking industry will reach peak capacity around 2025.
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