Excess supply due to Chinese exports coming to an end – CFO Nippon Steel

The oversupply of steel caused by rapid growth in Chinese exports may finally be coming to an end, opening up opportunities for a recovery in Asian markets. This opinion was expressed by Nippon Steel CFO Takahiko Iwai in an interview with Bloomberg.

According to him, Chinese exporters are finding it difficult to profit from overseas supplies because the regional market is oversaturated. In addition, export volumes are declining due to trade measures, including anti-dumping duties imposed by several countries.

«They’re gradually running out of places to go,» explained Nippon Steel’s CFO.

He added that the steel market in Asia is likely approaching the bottom and the situation will begin to improve, but did not specify a time frame.

At the same time, in an interview with Reuters, Iwai said that Nippon Steel sees no need to reduce US Steel’s capacity and expects an increase in the contribution to the American business’s profits in the 2026/2027 financial year, which will be facilitated by higher steel prices and technology transfer.

Although urgent steps are needed to optimize the American company’s high costs, capacity reductions similar to those carried out in Japan in the early 2020s are unnecessary because demand for steel in the United States is growing, explained Nippon Steel’s CFO.

Iwaï cited the high variable cost structure due to years of underfunding as the biggest challenge for US Steel. Nippon Steel plans to create mechanisms capable of ensuring stable profits even during market downturns. According to the Japanese company’s CFO, the implementation of planned investments over four years to increase the share of high-margin value-added products should significantly improve quality and cost competitiveness.

Takahiko Iwaï believes that the US market is less vulnerable to competition from China than others.

In December last year, Nippon Steel announced that it plans to invest 6 trillion yen (approximately $39 billion) over the next five years as part of its new medium-term business plan. The announced amount includes planned investments of nearly $11 billion in US Steel by the end of 2028.