- Nippon Steel to leverage Ovako’s EAF expertise, seeks government support
- Move comes amid shift in European steel demand towards eastern markets
Japan Metal Daily: Nippon Steel is considering the construction of an electric arc furnace (EAF) at its Slovak subsidiary US Steel Košice (USSK) as it explores opportunities to expand its European business, Representative Director, Vice Chairman, and Executive Vice President Takahiro Mori said.
USSK, which operates an integrated steelworks in Slovakia, is scheduled to become a direct subsidiary of Nippon Steel in October and will be renamed Nippon Steel Slovakia. Mori said that while the support and cooperation of the Slovak government would be essential, the company also plans to draw on expertise from Ovako, the Swedish steelmaker owned by Sanyo Special Steel, which operates EAF-based production facilities.
USSK has crude steel production capacity of 4.5 million tonnes (mnt) per year and manufactures a broad range of flat steel products. However, only two of its three blast furnaces are currently operating, leaving spare rolling capacity at the site.
The operating environment for blast furnace steelmaking in Europe has become increasingly challenging. While the European Union has strengthened barriers against imported steel through tariffs and the Carbon Border Adjustment Mechanism (CBAM), free allocations to the steel sector under the EU Emissions Trading System (EU ETS) have begun to decline this year, making it difficult for USSK to operate all three blast furnaces.
At the same time, demand centres are increasingly shifting from Western Europe towards Central and Eastern Europe, USSK’s core market. An EAF investment could therefore support higher output from the Slovak operation if the project proceeds.
Nippon Steel is expected to continue evaluating the proposal while assessing the extent of cooperation it can secure from the Slovak government on environmental matters and investment support.
In interviews with various media outlets, Mori repeatedly stressed the growing importance of engagement with governments in overseas markets. “In the past, companies may have been able to invest across borders and freely expand or reduce operations. Today, countries compete through industrial policy,” Mori said. “Understanding the policies of individual governments and how effectively those policies are implemented has become increasingly important for overseas businesses.”
Mori has been actively visiting what he described as Nippon Steel’s four major global regions. He travelled to India in February and April, where he met the Chief Minister of Andhra Pradesh, where AM/NS India is constructing a new steelworks, as well as India’s steel minister and senior officials from the Prime Minister’s Office.
In Thailand, which Nippon Steel regards as one of its home markets, Mori met Prime Minister Anutin Charnvirakul and Commerce Minister Suphajee Suthumpun in May to explain the company’s long-term vision. Discussions included policy cooperation aimed at protecting supply chains facing growing pressure from Chinese competitors. In June, Mori also spoke at a Japan Society dinner in the United States on the US Steel transaction and the broader Japan-US partnership.
According to Mori, excess steelmaking capacity and rising exports from China remain the biggest risks facing the global steel industry. The challenge for steelmakers, he said, is how to manage those risks through trade measures and government cooperation while continuing to pursue growth opportunities.
Although overseas operations are becoming increasingly complex, Mori said management capability and portfolio construction would become even more important, signalling that Nippon Steel intends to continue exploring new investment opportunities globally.
Note: This article has been published in accordance with a content exchange agreement between Japan Metal Daily and BigMint.
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