Nippon Steel Raises Investment to Nearly $1 Billion to Boost Production of Electrical Steel Sheets for Transformers and EVs

In actions to raise capacity and improve quality of its electrical steel sheets, Nippon Steel is raising its investment to nearly $1 billion at two of its plants in Japan. The moves will boost its capacity 40% by the first half of 2023 to meet rising demand for transformers and electric vehicles, the company says. 

The latest news came November 6 when the company announced it was throwing in approximately $332, 648,000 million more toward upgrades at its Setouchi Works Hirohata. Added to other recent outlays for the Hirohata plant and another in Japan, the Kiyushu Works Yawata plant, the total investment is planned to rise to about $988 million. 

Steady expansion is forecast in worldwide demand for electricity and electric transformers as the world’s population and economy grow, particularly in emerging countries, said the company. “Furthermore, efficiency regulations around the world on electric transformers are tightening to satisfy the need to reduce CO2 emissions. As such, it is believed that the demand for high-grade material with less energy loss for grain-oriented electrical steel sheets, used in the iron cores of electrical transformers, will be higher than ever.” 

The demand for eco-cars is also expected to rise from now on, owing to progressively strict regulations on automobile CO2 emissions and average fuel consumption. In this environment, demand for highly effective, high-grade materials such as non-oriented electrical steel sheets, used for iron cores in motors, is also expected to rise sharply, figures Nippon Steel. 

The company says that the investment represents a timely response to satisfy the ever-strengthening requirements for achieving a carbon-neutral world consistent with the Sustainable Development Goals of the United Nations. The project outcome targets a CO2 reduction effect of about 3 million tons per year. The plans have developed through four segments beginning in August 2019 with two at each plant involving upgrades for pickling, cold rolling, annealing, slitting line and physical distribution facilities. 

The moves come after Nippon Steel posted a record loss of $4 billion for its most recent fiscal year ending March 31. At that time, the company slashed its capacity especially in its lower margin crude steel business in response to fierce competition from Chinese steel producers and new protectionist policies from other countries. Covid-19 has been another key factor as the steel industry worldwide has suffered a significant slump in demand. Now the company appears focused on retooling to become more competitive in higher margin growth sectors such as electrical steel sheets. Nippon ranks as the largest steel producer in Japan and the third largest in the world. 

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