Message from the President

2010 New Year's Message from the President

Shoji Muneoka
Representative Director and President
Nippon Steel Corporation

Nippon Steel now faces two major crises.
The fist crisis is the current economic situation. In spite of the fact that the worldwide recession that began in the autumn of 2008 seems now to have bottomed out mainly on the strength of inventory adjustments and economic stimulus measures, business recovery in the U.S., the EU, and Japan is still proceeding slowly. It is difficult to say that the world economy has climbed out　of recession. In Japan, industrial sectors such as construction and private capital investment that have not benefitted from government economic stimulus packages remain at low levels of activity.
Moreover, the effects of certain emerging factors, including suspension of the government’s supplementary budget and high appreciation of the Japanese yen, are causing increased concern over yet another drop in business activity. Meanwhile, before reviving and entering a period of recovery, crude steel production in Japan reached only 43.33 million tons in the first half of 2009—the lowest semiannual total in the past forty years. What seem to be spearheading the recovery are primarily exports to Asia. Overall steel demand still remains at a low level, except for automobiles and home electric appliances. Much time will be needed for a full-fl edged recovery.

The second crisis is tied to the mammoth competition for survival taking place among steelmakers worldwide. In keeping with the pace of their economic development, Asian countries will henceforth see a steady growth in steel demand over both the medium and the long term. When seen from a supply-side perspective, the expanding number of Greenfield steelworks that are coming into operation or being built in China, Korea, Taiwan, and other Asian countries will continue to accelerate the severity of the immense competition that is taking place primarily in Asia.
We must be fully aware that the start-up of these advanced steelmaking facilities will sooner or later diminish the dominant position of Nippon Steel, especially in the area of medium- and high grade steel products.
In addition, the strengthening of regulations governing greenhouse gas emissions is under examination in Japan. In this harsh competitive environment, Nippon Steel will face huge competition with steelmakers globally in terms of technology, costs, marketing, resources procurement, and many other operational fields.

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