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Nippon Steel, Nisshin Steel eye business tie-up.

TOKYO, May 24 Kyodo

Nippon Steel Corp. and Nisshin Steel Co. have agreed in principle to strike a deal on the distribution and production of stainless steel sheets, company officials said Monday. The duo will set up a company in July to devise details of the proposed arrangement, they said. The joint venture will be evenly owned. The envisioned size of its capital was not immediately known. Steelmakers' margins on stainless steel products have been floundering due to slumping demand and the excessive buildup of capacity, they said. Overcapacity has led Japanese steelmakers to face the need to consolidate production facilities and cut back on costs, industry analysts said. If the proposed tie-up is actualized, it would be the core camp in the stainless steel industry, the analysts said. This may trigger a similar reconfiguration of ties among other steelmakers, they said. The basic agreement calls for having an executive from Nisshin Steel assume the presidency of the company conducting the feasibility study. When Japanese companies negotiate tie-ups, they usually form a committee comprising officials from both sides. This time, however, the two companies decided to set up a company in order to prevent details of the upcoming arrangement from being leaked, they said. Nisshin Steel is noted for its galvanized steel and other surface-treated steel products. A Nippon Steel official said, "The industry-wide supply of stainless steel products has come to far eclipse demand, so steelmakers are facing the need to counteract this problem." "The proposed tie-up is designed to revive the profitability of the two companies," the official said.
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Comment:Nippon Steel, Nisshin Steel eye business tie-up.
Publication:Japan Weekly Monitor
Geographic Code:9JAPA
Date:May 31, 1999
Previous Article:Japan reports 12.6% fall in trade surplus in April.
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