METI Reaffirms Support for Nippon Steel, Sumitomo Metals Merger

Ministry of Economy, Trade and Industry’s director general Takayuki Ueda of Manufacturing Industries Bureau said to reporters on Wednesday METI expects Japan Fair Trade Commission’s appropriate judgment on proposed merger between Nippon Steel and Sumitomo Metal Industries in the reality of international competition. He said METI already submitted comment to support the merger when METI sees the merger contributes to healthy competition in the industry. He said METI now waits the commission’s process while the commission indicates early process for the second stage of the review.

The steel makers handed required documents to the commission on November 9 and the commission will conclude the review in 90 days or by February 7, 2012. Mr. Ueda said the commission would count METI’s comment, in which METI emphasized the merger wouldn’t harm the industry’s competition and the users’ position even for some steel items with higher market share.

Mr. Ueda sees Japanese manufacturers improve the international competitiveness through globalization while METI cares employment issue by the offshore shift of the manufacturers. He said Japanese automakers increase local procurement at the offshore plants but they import major parts from Japanese companies. He emphasized high quality of Japanese steel and materials is key for Japanese industry’s competitiveness and Japanese steel makers have advanced technology to make high quality steel products with competitive cost and better quality management. He expects the merger attempt would contribute to the higher advantage of Japanese steel industry.

Japanese steel industry warns new scheme on renewable energy, which obliges power companies to purchase electricity generated from renewable energy sources at fixed cost, increase cost burden on electric furnace special steel makers and stainless makers. Mr. Ueda said the scheme is still room to adjust based on technical discussion until the start in July 2012 while the scheme allows relief for heavy power using industry if the power cost of the sales is more than 8 times of manufacturers’ average.