Japan’s NSSMC (Nippon Steel & Sumitomo Metal Corporation) has officially announced its acquisition of Sweden’s Ovako Ltd this week, a move that has given Japan’s biggest steelmaker a manufacturing base in Europe.
Ovako is a major special steel producer in Europe
Ovako Ltd is engaged in producing high-tech steel solutions in the form of bars, tubes, rings and pre-components. The company also produces steel for mining, rock drilling and construction applications. It has 10 production sites in Sweden, Finland, Netherlands, Germany and Italy, and several sales companies in Europe, Asia and U.S.
Ovako steel is made from recycled scrap which is then is then refined and transformed into products such as hot-rolled or cold-rolled bars with various profiles and forms of processing, tubes, rings and pre-components. The company has the majority of customers based in Europe but also exports its products to North America and Asia. In 2017, Ovako Ltd had registered sales of 921 million euros (USD 1.14 billion) and had assets of 743 million euros (USD 867 million).
The purchase of Ovako has given Nippon Steel a sales network in Europe besides adding 780,000 tonnes of annual output to the Japanese company’s roughly 45 MnT. The purchase will “strengthen and expand our global business and further strengthen our technology, product quality and product development capability for special steel (while) securing a base of manufacture and sales in Europe,” Nippon Steel said in a statement.
An official from NSSMC also said that “Demand of special steel is expected to grow in the coming years with firm demand from the automotive, industry machinery and wind power generation sectors, so strengthening the special steel business will keep stable supply to customers.”
Nippon Steel’s plans to expand overseas business
In the start of the year Nippon Steel has announced its intentions to boost investment, including mergers and acquisitions to 600 billion yen over the next three years in order to expand overseas.
The company also plans to increase its stake in Japanese firm, Sanyo Steel from current levels of 15.3% to at least 51% by 2019 in order to make Sanyo Steel its subsidiary. According to market sources, this purchase is likely to cost around 30 billion yen (USD 282 million) based on the current share price. Sanyo Special Steel is one of the top manufacturers of bearing steel, used in automobiles and other equipment, in their respective in Asia.
With NSSMC, Ovako and Sanyo Special Steel coming together, Nippon Steel will be able to expand its special steel business in the coming years.
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