METI Supports Offshore Strategy of Japan Steel Makers

Industrial Structure Council of Ministry of Economy, Trade & Industry (METI) held a working group meeting for industrial competitiveness on Friday and reported Japanese steel industry should aggressively follow the demand growth in emerging countries. The Ministry helps steel makers to advance offshore businesses when the steel demand is expanding in emerging countries and Japanese manufacturing industry is accelerating offshore operations. METI gives strategic and financial supports for steel makers’ overseas projects including Nippon Steel’s and JFE Steel’s plans to establish integrated steel plants in Southeast Asia or Japanese steel makers’ collaborations with Indian major steel makers

METI plans detailed strategies for each offshore area where steel demand is strongly increasing. The strategies will seek the best balance of steel export and local production, the expansion of offshore joint businesses with local steel makers and the acceleration of construction of integrated steel plants in emerging countries. The Ministry carries out financial supports through Japan Bank for International Cooperation and helps top sales and infrastructure constructions in emerging countries.

At the same time, METI follows Japanese steel makers’ domestic business restructure including steel plants’ integration. The Ministry eyes corporate tax reduction to improve Japanese steel makers’ competitiveness. Actual corporate tax rate has lowered by 3-8% in OECD or Asian countries for recent 10 years while stayed at above 40% in Japan.

METI’s strategy refers to survey and development of raw materials as well. METI advances production of direct reduced iron or usage of low grade raw materials. The Ministry also accelerates construction of large ports in Japan.

Japanese steel makers took top positions in the word steel market in 1990’s but Arcelor Mittal or Chinese steel makers tanked high in 2009. Nippon Steel’s share position was eighth and JFE Steel’s was ninth. Domestic steel demand is shrinking while offshore steel market is expanding. Japanese steel makers are strategically planning to construct steel production bases in Asia, India or Brazil to increase crude steel outputs. On the other hand, South Korea or Singapore carried out tax remission to support local companies. In other countries, the governments actively support private sectors through industrial measures.