BANGKOK (AP) — China’s Baosteel said Tuesday that it will acquire Nippon Steel’s 50% stake in their auto steel joint venture for about $242 million.
The contract for the joint venture, Baosteel Nippon Steel Automotive Steel Sheets, was due to expire on July 30.
The venture between Baosteel and Nippon Steel combined Japan's advanced technology with the promise of the huge and fast-growing Chinese market. But demand for steel has weakened in China as the auto industry transitions to electric vehicles and as property construction has languished during an industry downturn. Japanese automakers are the venture’s main customers, and they are contending with fierce competion in the Chinese market.
The Japanese newspaper Nikkei said Nippon Steel intends to focus elsewhere, such as on its contested $14.1 bid for U.S. Steel.
Earlier, Tokyo-based Nippon Steel said it was suing Baoshan Iron & Steel Co., or Baosteel, for an alleged patent violation.
Nippon Steel — the world’s fourth-largest steelmaker in 2023, according to association figures — and U.S. Steel are in the midst of a broad public relations effort to promote the acquisition. President Joe Biden's administration has balked at the plan on economic and national security grounds. So has former President Donald Trump.
In May, Nippon Steel postponed the expected closing of the takeover of U.S. Steel after the U.S. Department of Justice requested more documentation related to the deal.
Originally, Baosteel held 50% of the venture with Nippon Steel and the Japanese partner held 38%, with Westerm European maker Arcelor, now part of ArcelorMittal, holding 12%. Nippon Steel later acquired that to hold a 50% share in the 20-year-old joint venture.
Baosteel’s share price fell 2.5% on Tuesday. Nippon Steel’s shares were up 0.3%.
The Associated Press
