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Nippon Steel, Sumitomo Metal announce broad tie-up+.

TOKYO, Feb. 27 Kyodo


Nippon Steel Corp. and Sumitomo Metal Industries Ltd. said Wednesday they have agreed to open negotiations on a broad tie-up accord that includes potential integration of their stainless steel operations.

The accord lists areas for enhanced cooperation between the two firms, which already have business ties, from sharing semi-finished steel products and reinforcing their stainless steel operations to cutting costs in distribution and materials procurement.

Nippon Steel and Sumitomo Metal Industries, Japan's biggest and the fourth-largest steelmakers, said they will set up a joint committee to put their cooperation in those fields into concrete shape.

Their cooperation is aimed at ''strengthening competitiveness of the respective companies while maintaining the current competitor relations between the two, which will continue to be independent companies,'' the two firms said in a release.

Nippon Steel and Sumitomo Metal Industries said they will consider ways to boost profitability of each other's stainless steel operations ''with an eye to possible integration'' of the businesses.

Company sources earlier said their cooperation in the stainless steel field will likely become a pillar of their tie-up, and that the two firms may set up a company to integrate stainless steel operations as early as fiscal 2003 ending in March 2004.

If established, the company would be the largest Japanese stainless steel maker, with a 35% share of the domestic market.

Nisshin Steel Co. could join as it has a tie-up with Nippon Steel in stainless steel, the sources said.

Nippon Steel and Sumitomo Metal Industries announced last December that they would reinforce their ties.

Under a tie-up on stainless steel made in April last year, Nippon Steel's Yawata ironworks in Kitakyushu, Fukuoka Prefecture, currently supplies materials for stainless steel to Sumitomo Metal Industries' Kashima ironworks in Ibaraki Prefecture.

When operations are merged, stainless steel will be produced at both the Yawata and Kashima plants, as well as at Nippon Steel's Hikari steelworks in Yamaguchi Prefecture, the sources said.

The companies' subsidiaries, Nippon Steel Logistics Co. and Sumitomo Metal Logistics Co., will cooperate on distribution, they said.
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Publication:Japan Weekly Monitor
Date:Mar 4, 2002
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