Japan seeks US alliance to tackle China’s steel dominance

Nippon Steel Corporation, the fourth largest steelmaker globally, is pursuing the acquisition of U.S. Steel for $14.9 billion. This move comes amid rising concerns over China's dominance in the steel industry, where it produces the majority of the world's steel. Japanese prime ministerial candidate Shinjiro Koizumi has emphasized the need for U.S.-Japan cooperation to address the challenges posed by China's cheap steel exports, which threaten local industries in both countries. He highlighted that the influx of inexpensive steel from China, produced without renewable energy, undermines fair market practices. The U.S. steel industry, which has seen a significant decline in production, is also wary of the potential consequences of the Nippon Steel acquisition. Concerns have been raised that this deal could lead to a reduction in steel production capacity in the U.S., prompting opposition from both presidential candidates. The foreign investment committee has expressed apprehension regarding the implications of foreign ownership on domestic manufacturing. China's steel industry is currently facing a crisis due to overcapacity and declining domestic demand, particularly following the collapse of its real estate sector. This has resulted in a surge in net crude steel exports, which increased by 64% in 2023 compared to the previous year. The Chinese Communist Party's aggressive expansion of the steel sector has led to significant challenges, including heightened anti-dumping measures from other countries. In response to these challenges, Nippon Steel is lobbying the Japanese government to impose restrictions on steel imports from China. The situation underscores the complex dynamics of global steel production and the urgent need for collaborative efforts between Japan and the U.S. to safeguard their respective industries against unfair competition.