International Steel Companies Focus on Major Strategic Layout Adjustments

Amid intensifying competition and pressure for green transformation in the global steel industry, international steel companies are focusing on major adjustments to their strategic layouts. These adjustments show significant regional divergence. Most giants are scaling back in high-cost, low-demand markets like Europe, while increasing investments in regions with strong demand and favorable policies, such as North America and India. Simultaneously, some companies are also actively expanding their presence in emerging markets like Southeast Asia.

Scaling Back in European Market to Avoid Multiple Operational Risks

1. ArcelorMittal Gradually Exits
   Soaring energy costs and stringent carbon emission policies in Europe have drastically increased operational pressure on ArcelorMittal. The company has not only shut down multiple factories and canceled decarbonization projects but also mentioned in its financial reports the persistent pressure in the European market as a risk point for its development. Its strategic focus has completely shifted to regions with better profit prospects. It now only hopes that potential trade protection measures in Europe might alleviate some industry pressures, no longer making large-scale investments in the European market.

2. ThyssenKrupp Focuses on Local High-End Transformation
   Although not retreating from Europe on the same scale as ArcelorMittal, ThyssenKrupp has chosen to deepen its focus on high-end production capacity within Germany. In July, the new slab continuous caster and hot strip mill at its Duisburg plant commenced operation, increasing annual capacity from 1.8 million tons to 3.1 million tons, with a focus on producing high-strength steels and steels for electric vehicles, among other high-value-added products. This adjustment, against the backdrop of weak demand in the European market, aims to maintain competitiveness by phasing out inefficient capacity and focusing on high-value-added sectors, rather than through blind expansion.

Increasing Investment in North American Market to Seize High-End and Policy Dividend Opportunities

1. Nippon Steel Reshapes Landscape via Acquisition
   After completing the acquisition of U.S. Steel in June, Nippon Steel plans to invest $11 billion to advance capacity upgrades at U.S. plants, including building new hot-rolling mills and renovating blast furnaces, aiming to make its U.S. operations a core profit center. It is also evaluating building a new 3-million-ton-per-year electric arc furnace (EAF) plant, aiming to increase U.S. Steel's crude steel capacity to around 20 million tons. This move is intended to penetrate the North American high-end steel market and build a trans-Atlantic competitive advantage by leveraging the trend of manufacturing re-shoring/return to the US.

2. ArcelorMittal Continues Deep Cultivation
   The company's $1 billion electrical steel facility in Alabama is expected to be operational by 2027, and shipments from its Calvert steel facility have hit record highs. By focusing on high-value-added products like electrical steel, it is strengthening its supply capacity for the automotive and new energy sectors in North America, aligning with local manufacturing demand for high-end steel products.

3. Gerdau Optimizes Capacity Layout
   To align with North American tariff policies and local demand, Gerdau is advancing upgrades at its Texas plant. The first phase involves an investment of approximately $226 million to increase EAF capacity. It also includes constructing facilities for producing solar pile foundations and heat treatment facilities for wind power products, adapting to local steel demand in the new energy and infrastructure sectors. The project is expected to generate substantial annual EBITDA earnings.

Expanding in Emerging Markets, Betting on Long-Term Growth Potential

1. India Becomes a Common Target for Giants
   ArcelorMittal has explicitly identified India as a key focus for expansion in its financial reports, continuously advancing local capacity expansion projects and focusing on high-value-added products and downstream capability building. Nippon Steel is progressing with the expansion of its Gujarat, India plant's capacity from 9 million tons to 15 million tons and planning a new integrated steel plant,seeing strong potential in India's demographic dividend and the long-term potential released by infrastructure demand.

2. Nippon Steel Targets Southeast Asia
   Given the growth vitality of the Southeast Asian region, Nippon Steel has positioned it as a "key market." Through mergers and acquisitions and strategic partnerships, it is continuously expanding its market share in the region, attempting to build a stable profit source in this emerging market to hedge against the pressure of shrinking demand in its domestic Japanese market.