Nippon Steel announced its decision to terminate the joint venture with Baoshan Iron & Steel, ending a 20-year partnership that symbolized China’s steel industry modernization. Scheduled for late August, the withdrawal will reduce Nippon Steel’s production capacity in China by 70%. The company plans to sell its BNA shares to Baosteel for 1.758 billion yuan ($241 million), pending regulatory approval.
BNA, established in 2004, was a 50-50 venture with Baosteel, a member of China Baowu Steel Group. The partnership allowed Nippon Steel to meet the growing demand for automotive steel sheets in China while Baosteel acquired advanced technology. However, the surge in local electric vehicle production has squeezed Japanese automakers, Nippon Steel’s primary customers, prompting the company to focus on expanding in the U.S. and India instead.
Nippon Steel’s production capacity in China, primarily through BNA, stood at 2.62 million tonnes annually, accounting for 70% of its Chinese output. Post-withdrawal, its capacity will remain at about 1 million tonnes, including operations with Wuhan Iron & Steel.
The move aligns with Nippon Steel’s broader strategy, as it prepares to acquire U.S. Steel for over $14 billion, seeking to mitigate risks associated with U.S.-China tensions and diversify its global footprint. This decision comes as Japanese automakers face declining sales in China, and local steelmakers enhance their competitiveness amid an oversupply and falling steel prices.
