The Japanese Nippon Steel aims to almost double the production capacity of the Indian unit

By Yuka Obayashi and Ritsuko Shimizu

TOKYO (Reuters) – Japan’s biggest steelmaker Nippon Steel Corp plans to nearly double crude steel production capacity at its Indian plant in Hazira to secure a bigger share of the growing market, an executive said .

The expansion plan comes despite growing concerns about a slowing global economy amid rising interest rates and falling demand from major buyer China.

“We are accelerating investment in India,” Takahiro Mori, executive vice president of Nippon Steel, told Reuters on Tuesday. “In terms of steel, India is seen as the only market that will see significant growth.”

In 2019, Nippon Steel and ArcelorMittal jointly acquired India’s bankrupt Essar Steel, now called AM/NS India, and plan to expand the business.

The annual production capacity of the factory in Hazara, western India, would increase from around 8 million tonnes to between 14 and 15 million tonnes by building new blast furnaces, he said. declared, without giving a value for the new investment or other details.

“Our main objective is to capture the growing local demand,” he said, adding that Nippon Steel would consider further expanding Hazira and building a new steel plant in eastern India.

AM/NS India announced last week that it would buy infrastructure assets from Essar Group for $2.4 billion to bolster its steel business.

“The acquisition will give AM/NS greater flexibility to expand its operations,” Mori said.

Steelmakers face an uncertain outlook, with volatile prices for coking coal, iron ore and other raw materials caused by the Ukraine crisis and weak steel production from China.

Coking coal now exceptionally trades at a steep discount to thermal coal, used primarily in power generation, which is booming due to disruptions in Russian energy supplies.

Nippon Steel used coking coal as an alternative to thermal coal to a limited extent because only coking coal of a particular grade could be used for this purpose, Mori said.

In August, Nippon Steel forecast a 6% drop in annual net profit, a smaller decline than analysts had expected, saying it could pass on higher prices despite weaker production.

Nippon Steel, currently in final talks with automakers and other major customers, wanted to raise selling prices by at least 40,000 yen ($287) per ton for the October-March period, compared to April-September. , said Mori.

“We have borne the impact of rising material costs and a falling yen,” Mori said. “We are determined not to give in to the pass-through of rising costs to product prices.”

($1 = 139.1600 yen)

(Reporting by Yuka Obayashi; Editing by Edmund Blair)

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