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Nippon Steel will dissolve its joint venture with China's Baoshan Iron & Steel, cutting the Japanese company's steel production capacity in China by 70%, according to the Nikkei business daily.
According to the report, the company has decided to focus on expansion in the United States and India since its primary customers, Japanese automakers, face stiff competition from Chinese electric vehicle makers.
Nippon Steel has been considering ending its partnership with Baoshan, a subsidiary of China's state-owned Baowu Steel Group, the world's largest steelmaker, for roughly two years, according to Nikkei. It further stated that their 20-year contract, which was scheduled to conclude this summer, will not be renewed.
Baoshan will buy Nippon Steel's share in the joint venture, with the deal estimated to cost several hundred million dollars, Nikkei said, without providing the exact figure. After ending the JV, Nippon Steel will still have production capacity of around 1 million metric tonnes per year in China due to its joint business with Wuhan Iron and Steel, another unit of China Baowu Steel Group, Nikkei said.
The decision was not linked to Nippon Steel's bid for US Steel, which has led to some US scrutiny over the Japanese company's assets in China. Nippon Steel said last week it had hired former US Secretary of State Mike Pompeo to help with its effort to acquire US Steel. Pompeo is visiting Japan this week, according to local media reports.
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